were not necessarily always seated in the chief of staff's office. it is a busy job. pete prides himself on the mentoring of young staff. when he and i work together with then senator obama's office, there was a steady stream of these young staffers coming in and out of his office because he committed to do everything he could to find every kid that worked for him the next job. pete is selfless. everything i have ever done with them, he has always put the organization ahead of himself. i think that is one of the things that the president reveres in him, his loyalty, and

i think that is why he enjoys the president's complete trust. i knew that i would get asked about some reorganization and some time line stuff, and i wanted to make sure that i understood it as he understood it. i have always had that ability with obama. i have always had that ability with pete. pete, as i said, there is a great respect for peace amongst the people that have worked here. -- for pete amongst the people that have worked here. he is in the morning meeting. he is in the meetings in the oval office. he has been intimately involved in strategic decisions dealing with congress in order to get big pieces of legislation through. as you heard the president

, pete get the file at lunchtime on friday and has three hours before the close of business to solve it. >> what problems? >> different bureaucratic problems. the back-and-forth of government. pete is somebody who is trusted to handle anything and everything, and now he has everything. >> do think he is going to come out and be on the sunday talk shows? >> i will tell you what i told somebody yesterday. i said i have a good news and bad news. the bad news is, pete will not be doing an interview with you. the good news is, he will not be doing an interview with anybody else, so you will not get scooped.

pete is a behind-the-scenes guy. i do not anticipate a lot of that changing. that is the way he has been for decades of government service. >> are we safe in assuming that the president is hoping people will like the job more than pete things he will like -- pete will like the job more than pete he will like the job? >> that is a good way of putting it. he has had time to think about it. i think he is excited about this. i think, given his strategic sense, his organizational sense, and the trust of the president that he has, i think is perfectly situated and capable of doing a great job. we will all make sure that happens. >> is it safe to say the

president endorses rahm emanuel's campaign for mayor? >> it is clear how the president feels about rahm emanuel and his ability to make tough decisions. the city of chicago is going to have some tough decisions to make. i think it is a testament to the service that rahm has provided the president, that he has provided us, and that he has provided this country in serving this president that -- i think he deserved everything that was said today. as i have said before, we begin and end each day as the president does, in his office. he has been a tireless advocate for this president in getting done what this president wants to get done.

i have no information on political endorsements, but i think you know how the president feels about him and his ability to be the mayor of chicago. >> any concern about other longtime friends and supporters as well to want that job? -- who wanted that job as well? >> i think the president's words were fitting of the service the rahm emanuel has provided to him, the staff and the country over a pretty tumultuous 20 months. some of us were on the campaign. the next thing we were likely to do was to come here. rahm emanuel was not on that track. he had to give up and sacrifice as you heard the president discussed today, not just personally, when his family had

to give up. the president is remarkably grateful for that. >> there is a stimulus report coming out today. for television people, can you talk a little bit about what the report suggests to you? >> the report is going to say a couple of things, first and foremost -- and the president was briefed on this at the economic briefing yesterday, andg with aig and tarp, that is that we have met the legal deadlines that were set out in the law. we have met our own deadlines for insuring that the money it that was appropriated has gotten into the economy. createion track to the jobs. we have said that. cbo has said that. we are going to discuss a little

bit about what the recovery act has meant to increase economic growth and job growth and two other things. one, i think the number was 0.2% of -- if you look of the number of projects and number of complaints, it is 0.2%. i do not think that amount of funding has ever been spent with less complaint than what you are seeing. i think there is a practical impact as well in what you're seeing the republicans proposed in their pledge. it guarantees rolling back what is left to be spent in the recovery act. it will stop important projects dead in their tracks like clean energy projects. it will stop tax relief for 110 million americans.

for people that talk about not wanting to raise taxes, that is exactly what the pledge will do. it makes some tough cuts in programs like education that we know are so incredibly vital for preparing the students of today for the jobs of tomorrow. >> do you think it has been a success, and if so, why does the american public not seem to grasp that? >> the stimulus has been a success. has created jobs. it has created economic growth. it has turned our economy from one, as you heard the president discussed today, close to slipping into the brink of another great depression, to one that is moving in the right direction. i think there is no doubt that people are right to be continually frustrated by the fact that their economic

progress is not fast enough. we will continue to do what we can to strengthen the recovery. >> what did rahm emanuel tell japan -- when did rahm emanuel tell the president? >> i believe he told him officially on wednesday. his next steps and his decision are obviously something he and the president had talked about since the mayor surprised everybody, including the in notent and frorahm running for reelection. >> to outsiders, this may appear in sealer. -- insular. >> i do not know the day mayor daley said he was not running for reelection. it is an awful short time to

bring somebody in midstream to do that job. pete will take over some functions that he has had overlapping functions ability for some time. when you go to the oval office, if you turn in one direction, youend up in rahm's, if turn the other direction, you end up in pete's. >> there was a report today on human experience -- human experiments on guatemalans in the 1940's. what is the president's reaction to that? >> obviously this is shocking, tragic and reprehensible.

it is tragic and the united states by all means apologizes to all of those that are impacted by this. the president is scheduled to call the leader of guatemala later today and personally expressed that apology. >> it happened in the 1940's, but does it hurt america now? >> obviously, it is a tragedy that has impacted many, but i think we have dealt with it in a -- we were brought this information and acted on this information. i think the apology is one that is well deserved. >> can you say any more about the meeting with the president's

economic recovery advisory board? >> i do not have that with me. i will shoot it out to you as soon as i get it. i believe that we will be talking a little bit about community colleges and the challenge of creating a skilled workforce. >> regarding the fund-raiser, is the president going to say anything about the green party candidate who is getting a large percentage of the vote in illinois? >> i do not know that off the top of my head. >> the president met yesterday with democratic leaders. it does he think there is any point in calling republican leaders here for a similar meeting? >> the president was talking with democratic leaders to talk about the next few weeks as we

head into an important election, but also what still remains on the calendar. i mention some of that yesterday. i do not have any meetings on the planning schedule with republicans between now and then, but i do not doubt that there may well be meetings before we head into the session mid-november. >> it sounds like there is a lot going on between the white house and republican leaders. the words president obama used in his fund-raising speeches and political speeches denouncing republicans as obstructionists, holding back recovery, holding issues hostage. >> those are all things that the republicans have bragged about. i hope the president does not give it a bad name by mentioning

what they have done. mitch mcconnell bragged about saying no. john boehner helped a lobbyist offer a pledge that would roll back recovery and raise people's taxes. the president is in many ways reiterating exactly what republicans have set themselves on the stump. they want to stop everything from happening. they want to roll back things like wall street reform. they want to roll back protections that we have seen put into place as far as health care reform. i do not know that the president does not have the same message the republicans have, and that is, they're bragging about slowing everything down and we are mentioning that that is what they are doing. >> what about drinking slurries?

>> i am going to find the slurpy cancer. i know that is one that is close to your heart -- the slurpy answer. i know that is one that is close to your heart. >> pete has been charged with closing guantanamo. why has that not been accomplished? >> that was a project he was given. i think it is safe to say there was not as strong up process around seeing that come to fruition as they're needed to be, and that is generally the type of thing he fixes the best. gluck, -- look, we always knew

this was going to be hard. we have met resistance even among republicans that, before the president decided we would close it, actually supported closing it. i am not sure pete will have this directly in his portfolio given that now he has a little bit of every portfolio, but he was brought in to create and ensure that we had a good process around that, and i think it has worked much better since. >> do you have a regret about not being able to finish that task? >> the door is not closed on finishing that task. if you asked counter-terrorism experts and our commanders in the field, they will tell you that that is -- guantanamo bay prison is a recruiting call that echoes around the world for

extremism. it is used in recruiting new individuals to that effort, and the president remains committed to ensuring that they will soon not be able to do that. >> counter-terrorism officials say they believe [inaudible] terrorism and european cities. >> that is not something i'm going to discuss publicly. >> another secretary geithner gave a speech to treasury employees and how history would view it harptarp. how was that affecting the market?

>> if you take a look at aig, converting to common shares of stock, as of yesterday, that would be a $20 billion profit. i'm not walking way out on a limb to say that was not the conventional wisdom. most people in their accounting of the troubled assets relief program, was that that money was gone. the briefing the president received reiterated that financial institutions, the investment made by t.a.r.p. in the financial institutions is likely to yield a process. we are at roughly one-tenth of the cost today that we were at last august.

this is not an accident. if you take some of the steps that were taken at aig or some of the steps that were taken at places like gm or chrysler, this created a bit of a star but this was not money to meet the balance sheet for balanced sake. this required some very tough changes in the company, management changes, and it changed the way these companies were operated because they were not operating in a way the provided insurance to anybody that they would be here for long. instead of handing out money and perpetuating a series of bad practices, we made investments to ensure that the jobs of millions of those who work not only in ottawa facilities, but an auto parts manufacturing, to

save those jobs, but to ensure that we were not just handing out a check and in three months they would need to come out for another. we instituted management changes that these companies back making a profit again. they're much healthier than when the president assumed office 20 months ago. >> why is that not scoring political points? >> i will be honest with you. i do not know the people know a lot of what i just said. we will help tell it. i hope everyone will too, because it is not the conventional wisdom. a i t alone was -- aig alone was, again, the conventional wisdom was put $180 billion in

that column because we will never get it back. this is not something that is all going to get sold tomorrow. it is a pretty big chunk of money, but i think we're likely to end up with a profit. i saw a release before i came out here on shares of citigroup. they netted a profit. that is because we have taken steps to ensure important management changes but also to ensure an economy where companies like that can function and make a profit. >> as a successive aig suggests that they would have done well and did not need to -- does the success of aig suggest that they would have done well without the bailout? >> if you look at gm and

chrysler, if we had not bail them out, you would have had to go see a new gm or chrysler car in the smithsonian. i think, left to their own devices, these companies would not have seen a turnaround. i think there were some important management decisions that we impacted, and because of that, we see companies moving in the right direction. we see taxpayers that will recoup their money and then some. i think that is important to know. >> could you talk about how you see the white house changing in terms of strategy, culture or atmosphere? >> there is no doubt that there is a personality difference between pete and rahm. that is the understatement of the day. that being said, pete has been

very involved in this organization and this president since late 2004. i remember having dinner with pete and then senator-elect obama. the president said, there are two names on my list for a chief of staff. you are the only name on one list and there are a bunch of names on the other less. pete has been important to this office for more than six years. i think in many ways you will see important continuity over the next several months, which is important to the functioning of how this president works. >> been thinking abut the shape of the white house and personnel

decisions, will the outcome of the election determine what kind of people you want to bring into the white house, including a new chief of staff? >> it certainly could. honestly, that is hard to define three, four, five weeks away. as we discussed yesterday, there is always natural turnover in and in ministration. we are seeing that natural turnover. regardless of the outcome of the election, pete is in charge of what has to be put in place. i have no doubt that the decisions of that reorganization will take into account what ultimately happens in the election, even as we now begin to identify a cast of people job can fill dr. summers'

or other places in the white house. >> many democrats are saying that the white house needs a new face to deal with what is likely to be a transcendent republican president -- presence, if not a republican majority on the hill. pete does not provide that phase. >> i do not know where you're hearing that. is that mainly on capitol hill? pete is a fairly well known quality -- quantity of their -- quantity up there. pete was a senate staffer for

part of 2007. it is not that long ago that he was up there. we have several weeks to go before an election, and obviously, without knowing the results it is hard to divine what the message will be. >> will those decisions be made after the election? >> i do not anticipate that they will be made prior to the election. >> do you have a time? >> i do not, but i do not think anything happens there for the next several months. >> are you having a meeting with congressional leaders later in the day? >> i can check. >> regarding the middle class

tax extension, has the president made it clear that you once that even if he has to give on something else? >> i was not there for the briefing. the president reiterated his thattion on ensuring dept middle-class tax cuts not expired. he does not want the cost of that happening to be $700 billion in tax cuts for people t.o do not need it meri >> is there any chance that congress will not act to extend the tax cuts before the election? >> that is a question for congress. we will have to deal with that in mid-november when the senate

and the house come back. there are a number of issues that we have to deal with. we have children's nutrition. we have a very important start treaty the past committee with bipartisan support and we expected to be passed by the full senate. . >> word is, that in a lame duck session, the president will not have the same dynamic. you will have the same members of congress but it -- >> tell me what that feels like and i will be able to answer it. >> [unintelligible]

>> look, obviously, that is a series of broad questions. the security council stuff -- and i anticipate that the world economy and our bilateral relationships with india will be an important part of that trip. from a security standpoint, obviously afghanistan and pakistan and how that is all interrelated in that area of asia, particularly with india, will be a big focus of what the

president discusses with the prime minister. >> we have not seen any videotapes from osama bin laden in the last couple of years, only audiotapes. [unintelligible] >> i doubt they will be converted -- comforted in getting the aid is necessary from someone who is not showing their face to the world. we are pledging our commitment and assistance to helping people in a tragic time.

>> is rahm emanuel going to continue to be involved in any decisions with the president and will he remain his -- retain his security clearance? >> i do not know the answer to the second question. in terms of the first question, i think the president will always listen to the inside full and candid opinions that rahm emanuel has shared with the president and the staff for 20 months. he is going on to a fairly busy endeavor, so my guess is that his focus will be on that, as it should be. i do not want to take anything away from what the president said in terms of the friendship

that he shares with rahm and what he has meant to this staff and to getting things done. i will check on the security clearance. >> does he have a staff tracking system? >> it usually involves yelling. [laughter] where is so and so? i do not know if that was a fancy dinner, that he had installed. intercom that he had installed. i had to wear an ankle bracelet on my wrist that would denote my location. [laughter] >> is today his last day or is

it sunday? >> i believe today is his last day. i think there will be a little celebration for him later today and the residents. -- up in at the residence. the fish was a funny idea. it was a funny way for people from chicago to say goodbye. >> where is it now? >> is the special. [laughter] it was supposed to be east meets west fish tacos, and they have already updated the board to say east meets midwest fish tacos.

>> u.s. said that this departure is part of the natural -- you have said that this departure is part of the natural rhythm of history in the white house. is there any casual talk about other departures? >> i have had a conversation with the president. i do not know if others have. again, it is hard for me to deliver that answer, not knowing honestly what other people have talked to the president about. i will say this. obviously, it is a day of extraordinary staff changes. any time a chief of staff comes and goes, but our to do list that we have today will be largely the same as what we

have on monday. in many ways, i do not see a lot of operational changes. we have the same series of challenges before us. >> others administrations would say, now is the time, if you are ready to leave, make that known. >> i think each individual themselves is going to have to make those decisions based on their individual circumstances. >> organizationally, is this that time? >> i think naturally it is. i have not seen or heard a broader call for making a decision. i do not think you need an e- mail to understand that there is a natural cycle to this. two years is in many ways a breaking point in that cycle.

>> following up on my question to you yesterday. civil rights leaders have been talking to staffers at the white house about the weekend. your address to the issue of the economy, but you never addressed the protest itself. >> i do not know that anything will probably change my answer from yesterday. we have gone through the most tumultuous economic time for virtually everybody in this country. historic depths of job loss, of economic retraction. it is important to note that we are heading now in a different

direction. we are making progress. the economy is strengthening. is it strengthening as fast as we would like it too? of course not. but at the same time, we are in making a misimpression that adding together at the job losses from the last three recessions -- if none of them would be easy to get out of, how would something that is three times as bad be easy to get out of? we had three crises happen simultaneously. it was a perfect storm of economic disaster. >> but the perfect storm is being led by people who are

friendly with this administration, not community leaders who will be marching in this demonstration. they're marching about education, justice and jobs. what does he say about that? your allies are marching about something you're not dealing with. >> i will take our record on any of the topics that you just mentioned over the past 20 months and compare them to the 20 months before that until they're comfortable with that comparison. we lost more than 8.5 million jobs. that was not going to get fixed overnight. it is not going to get fixed over a lot of nights. it is going to take a long time. if it was a simple problem, it would have been solved before we got here. it was not. when we got here, things were going drastically in the wrong direction. the president made some

important steps, some courageous steps to turn that around. it is going to take some time. i will say this about our education. it has been the focus of a lot of activity and you have seen the president talk about it. i will put our record on education reform up against any president at any time. what secretary duncan and president obama have been able to do in getting states to make decisions to strengthen their standards is a once-in-a- lifetime reform. it is important, because it matters to the types of families that it raised some of the types of economy we have, the type of income they have. it is important reform. i have been given a note that says rahm emanuel will not maintain his security clearance as of his departure today.

>> [inaudible] >> not that i am aware of. we can google that too. [laughter] >> i will take one more question. >> the president has spoken about enthusiasm gap. is he worried about that? >> i think anybody who read the balpolls can see that republicas are more excited about the upcoming election then democrats. if you look at the nbc poll this week, it showed a lessening in that enthusiasm gap. >> what is the message to people who might be inclined to sit it out? >> get involved. it is too important not to. everything they care about is at

stake. the direction of our economy is at stake. the direction of our foreign policy is the state. -- is at stake. people have an important investment in the outcome of this election. >> the president gave a speech to the un speaking about the middle east. can you say what he has been doing personally to keep those talks going, whether there was a memo to benjamin not -- benjamin netanyahu and? >> our special envoy has been in the region over the past several days. he met with both parties. we were disappointed at the news of the expiration of the moratorium last sunday.

the did not dampen our resolve to continue to move this process along. the parties that came here several weeks ago came here and demonstrated a genuine seriousness in getting something done. that remains our mission. the president had a meeting right before i came down here. he was meeting with secretary of state clinton to get an update from the region. she in our special envoy george mitchell are our point people and negotiations. we understand that there will be hurdles along the way to a comprehensive and important piece. -- peace. we will work to get over each of

those hurdles as they come, and keep the talks going with the sense of purpose is that you have witnessed here and will witness in subsequent talks. the thank you, dies. have a good weekend. -- thank you, guys. have a good weekend. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2010] >> c-span 2010 campaign coverage

continues tonight with four debates. we will begin with the candidates for california governor. then we will show you the debate for arizona senate. then, issues important to new hampshire. finally, we had to colorado for it under's debate. live on saturday, to mock -- for a governor's debate. live on saturday, a rally by a coalition of leaders of national organizations. they say they are rallying for jobs, justice and education. we will hear from rally leaders as well as environmental and peace activists. see that live tomorrow starting at noon on c-span. >> this weekend, explore the reality behind science fiction, the vision of einstein, and the

physics of the impossible. join our 3 our conversation with your calls, e-mails, and tweets. >> washington had one of the more difficult mothers of all time. she was a crusty, self-centered woman. you would think that the mother of the father of our country would have taken pride or pleasure in the suon. >> sunday, a soon-to-be published biography of george washington. it is the first large-scale volume biography of our first president. >> mr. cameron, you were an optimist once, but now all you have shown is a miserable, a pessimistic view of what you can

achieve. you hide behind the deficit, but we will not let you get away with it. >> the newly elected labour leader speaks sunday at 9:00 on c-span. >> our local content of vehicles are traveling the country to look at some of the most closely contested contest leading up to election.ber's >> what is keeping you up at night? >> of all of the money the government is spending. i worry about what is going to happen to my grandchildren. >> i have three kids and i have the same fear. are we going to leave them with the same opportunities that you and i knew growing up?

>> i do not think we should raise taxes in this economy. it is mathematical. you have to put more money into the system or pay more out. >> if times were better, what would you do? >> i say look, let's put everything on the table to solve the problem. you looked at the high-end of the benefits first before you start raising taxes. i would say, can we work the spending side before working the tax side. >> on the democratic side is dan field. this is his third time running. he is hoping the third time is the charm. he has been well met. he used to work for ge capital

and mortgage finance. then on the right, you have a political newcomer. he owns a pest control company in the chicago area that is pretty well known, and exterminator can any -- company. they both have three kids. they both make over $100,000 per year. they are both of the same economic class, but on two different sides of the political spectrum. it seems to democrats that they can take this. this is one of only three or four seats in the country that they see as a jump ball they can get back from the republicans even though they're going to lose 10, 20, maybe even 30-40 seats across the country. citizens from the north shore

suburbs, a very elite, a very wealthy, very well educated suburb of chicago, it goes a little bit west and then stretches pretty far north to an area that is heavily hispanic and mostly poor. >> a lot of people are out here that want to support their family instead of being on low income or going to get food stamps. it is not everybody that wants to just sit down and do nothing. there is a lot of us that wants to work, that like to work. we have no start. we have no programs that tried help you and it is not successful. we need something successful to help us support our families instead of being out here doing nothing. >> what kind of lead would you

taken congress to address this regulation? >> i think the voters are most concerned, just like everywhere else in the country, about jobs, jobs, jobs. in addition to that, you have part of the district that is hit really hard by a unemployment. it is above 15% in some areas. they want to hear their candidate talk about how they're going to put them to work. >> the biggest challenge to me is making sure people understand the differences between myself and my opponent. what i have found by talking to voters is that they want someone who can get the economy back on track. they are not willing to compromise on their social bill is to do so. my opponent -- their social values to do so.

my upon a wants to take away women's rights. i want to -- my opponent wants to take away women's rights. i want to strengthen them. my opponent wants to stop obama reforms. i want to strengthen them. >> i think we have to create an environment that allows the private sector to grow, not the government. my opponent has been in line with nancy pelosi and the democrats about growing the government as the answer. i believe there is a better way and the better way will be empowering individuals and small businesses to grow, to invest in technology, equipment and materials to expand their business. >> both candidates are trying to run into the metal, and they are running right into each other there. the dan field is going after social issues. dole says he is pro-choice.

he is trying to attack him on the environment and all of these other hot button issues that track well for it democrats. dole is trying to align them with the health care bill and other big government spending. he portrays him as wanting to raise taxes. those are the two components that make up the majority of voters. they're socially moderate and fiscally conservative. they have really come apart from their parties. the parties are not popular anywhere in the country, it seems. even though obama is still pulling about 50% in the district, voters are not interested in making sure there is a democratic controlled congress or a republican controlled congress. they need to portray themselves as independents and have a

voters by that. in 2008, $10 million or more was spent on both sides. you're going to see a lot of interest groups at play here. democrats believe they can take a republican seat, so you're going to see the congressional campaign committee dumping millions of dollars into this race in television ads. it is very expensive to buy ads in the chicago market, and they're going to put them up. >> our local content vehicle is traveling the country to look as some of the most closely contested house races in the midterm election. for more information on what our local content vehicles are up to, visit our web site, c- span.org/lcv.

coming up, at a news supreme court justice elena kagan takes the traditional -- new supreme court justice elena kagan takes the traditional walk up the supreme court steps before she is sworn in. that is just under 40 minutes from now here on c-span. this morning, reporters sydney free bird talk about his story on what happens to military families after troops return home from iraq and afghanistan. freedberg is an investigative reporter here to talk about his cover story on the september 18 "national journal" issue, "when johnny comes marching home again." what is the reintegration process like for these people?

guest: this story, first of all, is part of a series i've been working on since 2004. it is a series of oral history interviews with service members, and in some cases with family meers, about the experience of going to iraq and afghanistan. remarkable insights, everything from counterinsurgency strategy to military hardware to psychological issues which come up again and again. continue this project full time now, because it is the most fun i've had as a reporter. there are stories i hear over and over again, where i talk to people, whatever the subject is, the families come up. 50% of the army is very, and the professional corps of army, senior sergeants and the officers, are more likely to be married, older, more likely to have kids.

people are leaving their families, in the case of the army, for a year at the time. in other cases, the air force has four to six months, the marine corps has six to seven months of the army has the longest separation. people have to come back, and turned back around again. families come up over and over again. host: what did you find out? what is the impact of these long months and years away from each other? what is the impact on marriages? guest: what was striking when i researched this particular piece -- it is not all fun. there is a honeymoon period, but there is a lot of readjustment that has to take place. at a simple, the spouse who stays at home -- at a simple level, the spouse who stays at home has to do everything, a single parent in many cases, for

a year. all the stuff about fixing the washing machine, taking kids to school, paying the bills in many cases -- i know a couple of guys who pa bills by mail from afghanistan. all this has to be readjusted during deployment. all of it has to be renegotiated when people come back. even if you don't have posttraumatic stress disorder, you don't have these suicides, which are horrifying, even if there is no dramatic problem like that, it is just hard. you could imagine being away from your significant other for a year and coming back and the adjustments. for kids, another readjustment. and then with t fact that one person has been away in a war zone, the level of stress that has been going on, and, frankly,

your social skills over there -- that is the one thing people mentioned, that you get in the mode 24/7 of being military. you or yelling orders at people, people are yelling orders at you. that is that preparation for renegotiating a mobile roles -- that is bad preparation for renegotiating merkel roles and dealing with your kids when you come back -- marital roles and dealing with your kids when you come back. people are adjusting with how they talk, dealing with when they get angry, and marriages break up. there is a clear upward trend. host: according to the defense manpower data center, 6.3% for active duty military, in 2009. guest: 2010 data is not collected yet. host: 10% of all military

divorces, enlisted women. in this demand, 26% -- enlisted men, 26%. what is the difference between officers and enlisted? guest: they make up the backbone of the armed forces, so they will have the most divorces brothers. -- the most divorces regardless. it includes people who are, on average, less educated in this to personnel have a high-school diploma but usually ncollege. officers are required to have college. that is a risk factor. a lower educational background, often, lower socioeconomic status coming in. all this factors. -- all risk factors.

when you break out of a population of which group gets divorced more often, -- when you break down in different populations of which group gets divorced more often, there is a male soldier or service member, a female civilian spouse. those folks as a group of the lowest divorce rates. they are going up through the whole population. if you look at female military personnel who are married to male military personnel, there is what is called dual military marriage. as you might expect, the divorce rate is higher. there is more stress. you might get the blood back to back and you never see each other. -- might g deployed back-to- back and you never see each other. but the highest divorce rate is what you might call were sold marriages, court that is the supply -- what you might call

role reversal marriages, where dad it is the civilian and the wife goes to war. that role reversal so hard -- is so hard, and one of the women in the story talked about, men are so unused to being to stay-at- home parent, and mom goes to fight the deadly hazards, and a lot of them don't adapt. if you look to them in general, they divorced at the higher rates than males. host: city freedberg sat down with 140 militant -- sydney freedberg set out with 1 en route 40 military service members. -- sat down with 140 military service members. we have a special line this morning set aside for active

duty families, by the way. we want to hear from you as well. stockholm, new jersey, democratic line. good morning. caller: recently, stephen colbert had a spectacular two- part salute to the troops on his "colbert report," and in response to one of his questions to the veterans, what can you do to help troops reintegrate into society, and the response was spectacular -- "don't be afraid of us." i would like to know what you think of that. guest: one of the really positive things in this conflict, unlike the vietnam era, where a lot of the veterans have bitter memories of how they were treated when they came home, there really is from both the left and the right -- we

just got a call from the democratic line -- whatever the licies about the war, there is a lot of support for the troops , and people letting step ahead in line, shaking their hands when they go to the airport. that is a positive thing. one of the people i talked to talketo forc-span.or-- the article, he said, "people will talk to me at the airport and take my hand, but there is my wife next to me, and she has been through a lot, too. we need to acknowledge her." she has posttraumatic stress issues, because, among other things, she was on the phone with her husband wn a rocket attack came in and the line went dead she thought he had died. he got through 20 minutes later,

but that is an example of h much stress can affect families at home. we need to our knowledge and support families -- we need to acknowledge and support families. don't be afraid is a good point. 1%, may become of the population is in the service or directly related -- 1%, maybe, of the population is at the service or directly related to someone who is. host: ryan, argue in the service? call -- are you in the service? caller: iot out in july. i saw the divorce rate on the screen, and it is so hot, especially it -- it is so high, especially for the lower in listed people. i have seen so many people becoming -- just cheating on

their families and everything like that, pricking their vows and all that -- breaking their vows and all that business. host: what is it like for you and your wife coming back from afghanisn? caller: reintegrating was an interesting process. i was at fort hood and they have a pretty good reintegration process there. host: what sorts of things due d -- what sorts of things do they do to help you out? caller: a lot of suicide awareness, of family time to -- remeetremade love o loved ones and remeet their children. i have seen a lot of friends of mine who's marriages fall apart,

because they came back different people. host: how come the program help you but not necessarily your friends? caller: honestly, everybody is an indidual . one program cannot work for every person, every person is different. guest: i thank you and your wife as well for your service. people like you are at war and working very hard, and the population is supportive but kind of detached. there is a multitude of programs and it does vary from one base to another, not to mention the army and navy and air force and marine corps. there is a lot of innovation and different programs out there.

individual bases have things. different states have things for their own national guard whole separate reintegration issues because they have to come back to jobs as well. and the veterans affairs aspect, and the for each program has outreach to military kids. something that experts have told need more well- intentioned programs at this point. we need to reinforce the ones we alady have the working, we need to figure out which ones are working and which ones are not working. sometimes they are herded into an auditorium and shown slides and sometimes they're not really motivated or know what he or she is talking about. there are programs like in maryland, where it they have small groups with two

psychiatric professionals per group, and they go around the room and see who is not participating and they reach out and draw them out later. there are basis in states that have different times where they reach out to people. many months and years after they come back. host: this is part of an oral history you did starting in 2004 with about 140 service members. what do you plan to do with this material? you say you will focus on it full-time. guest: it was one of several things i was doing at "national journal" as a defense repter. it was my favorite thing. the stories people tell, some of them are very funny, some of them are very dmatic, some of them are very moving. i was checking my audio

recordings, a story of a woman's husband coming back and not being back in his hotel room, because he was on attack to be it for awhile -- attack duty for a while. and she was so picked by, where is he, or is he? i had tears in my eyes as checked the audio. these people who honored me by sharing stories over the years are -- i profoundly appreciate them and it is a great pleasure and honor to work with them. what i do now is to continue that full time. i have been doing interviews over the years and i will be doing more interviews. i will be putting transcripts on-line, not confined by the fiscal magazine, you can do a lot more. these people have insights on things like counterinsurgency

strategy, or where the military needs -- what the hardware the military needs, how to support the family's best, that need to be heard by washington, people anend.t host: christine, a chaaign, illinois. caller: my dad was inhe air force, and he was a career man, retired master sergeant. the quality of people who make it through, and the neighbors we had -- we live on based mostly, and i've got to air force-based schools and public schools. air force-based schools are so much better for kids going through these things, because you are never the new kid. everyone is more accepting,

because they have gone through the same thing. i was a kid during the vietnam war so i had to watch it on tv. i can only imagine what kids today go throu. i really empathize with them. host: christine, studies have shown that kids and, as we said, whitesan suffer from post-traumatic disorder as well. did you go tough that experience? caller: i was 5 and he w gone for six months and it was hard. i did not know exactly where he was. i would seat trees on fire and things blowing up and i knew he was there and it was scary. but the support that our neighbors gave us -- the men who were not gone would come over lawn.rderlimow your the women would stick together, would have coffee klatsches and

wives clubs. it is kind of like a brother read and sister had -- a brotherhood and sisterhood. but most the bases i was on are all closed. i cannot take my kids there. they are all different. they do need to have things for people,f they need them, and notice that are there. guest: thanks to your father and to you as well,issing at christmas and worrying about him, what you have given to this country. the thing that many families have said to me is that the first line of defense -- it is not the official programs all over the pentagon or army or whatever. it really is the neighbors and other families and their unit. the thing that is difficult, but also different, from the vietnam

era, is that volunteers burnou out. if it is an informal system, people fall through the cracks. the phillips were at $a fort at one point and there was no community to support him. that was much harder on his family, to playing with a group of people who had a -- deploying with a group of people who had a shed badge and structure. there are family readiness groups that are run by volunteers, but now have paid assistance or multiple assistance, and there are contractors, sociological counselors, who are running to

the bases now. -- run through the basis now. they cannot export counselors to help people through. -- they bring on extra counselors to help people through. as critical as the woman next door coming over or the guy next door coming over to mow the lawn, the whole burden is no longer on them. in the vietnam era, it was your damn problem. that has changed. host: democratic line, maryland, you are on the air with sydney freedberg. caller: i have two points. the first is that i really commend you on the stuff you were doing and getting involved with. one thing i notice is that in the beginning, we all were kind

of together and we were going after the situationith 9/11, and the thing that created most of our armed forces to go. 9/11 came about, and i think wi bush -- and again, i'm not bashing him -- i just think we took our eye off the ball and went to iraq and caused it to become more of a partisan problem. when we had that problem, you had a hard times for the armed forces to do a better jtheir jo. host: let's talk about politics and the impact of that, when soldiers come home and your political debates. -- hear political debates. guest: they enjoyed broad bipartisan support, so that is not a political football. but the country is divided over the wars. there are real reasons for that.

it is not pmere partisan bickering it back and forth. there are profound differences and a person can argue either side of the issue for a number of reasons. it is hard on the troops that some people, many people, see what they're doing as noble for the sacrifice of the country but ultimately useless, ultimately will not go anywhere. most of the people i talk to believe pretty strongly that this is going to be worth it, and that we are going to make something better in afghanistan and iraq and that the country will be safer. but there are some real doubts, and that is very hard to think that you spend a lot of life, a separate youd from your

family and senior friends injured and killed, and you, and are not sure it s worth it. -- and you come home and you are not sure it was worth it. host: jim on-line for active duty families. caller: thank you for c-span. i had a lot of interesting expenses coming back. i spent 13 years in the air national guard and have been mobilized before you are times. this last time coming back from iraq -- have been mobilized four times. this last time coming back from iraq, i was hit with a lot of attacks. i was working in idaho, and once i it started with signs of ptsd, they very weirdly ask me to resign. i am coming to find out that a lot of these situations are

typical for guys in the guard, where they keep on mobilizing as an mobilizing us. -- mobilizing us and mobilizing a spread i thought that over time -- and mobilizing us. i thought that over time at the sides would go away. -- signs would go away. now they are pushing me into an involuntary retirement situation, and they are kind enough to but not active duty order so that i have some sort of income. but americans think it is some sort of john wayne movie, and because hollywood has done a great job glorifying what goes on, they don't understand reality. i kind of wish they would send me bactoraq and let me stay there until i was killed. guest: well, thank you for sharing that. that is hard stuff to talk

about, particularly since you say you of ptsd, that has consequences for your career. i hope you talk to folks about it as you talk to us. it takes courage, a lot of courage, to speak up, especially in a public way like this. more service members need to do that. and to overcome the fear and fight back against that stigma, the discrimination. i can understand why a commander or employer would be worried about someone with a posttraumatic stress diagnosis. but, that sd, there are things to do besides kicking them out. that can make it worse. it is important, because there are adverse consequences for their careers, but there are a lot of folks with ptsd or major depression -- a rand study a

couple of years ago, a worthwhile study to look at, estimated hundreds of thousands of people. no one is really sure. people that stand on their foreheads -- get stamped on their foreheads "ptsd," and "we cannot do anything with you, goodbye." the troops do not see themselves as victims. even the full blown ptsd is a treatable condition. i am not sure you entirely get over it, but you can do things to get better. another story in this whole series,

www.nationaljournal.com/oralhist ory -- there is a whole spectrum of different approaches to treating ptsd. a lot of people come back driving high-speed convoys looking for roadside bombs, and they find driving the highway here very stressful. they cannot drive. it is too upsetting, and they become aggressive and afraid. you have a psychological counseling and talk about it, and you and your friends and drive around slowly in an empty parking lot at 5:00 in the morning, and work yourself up to the back street, then up to the major road, and you get on the highway again. there are ways to work on this. there are medications that are affected. sometimes you speak up and say, "i need help," and people smack you down. that should not happen. as admiral mullen said, " that

should not happen." won a resource that is great is military one source, a clearing house for those with its deployment issues and it is confidential. chaplins, unlike psychologists at the military hospital, are not required to report to military commanders. they have confidentiality production. there aralso private groups -- one is a confederation of counselors, a psychiatrist, psychotherapists, who donate time to treat personnel. national military family association is a great organization for a civic military families, active or reserve, struggling with

deployment issues. host: >> we are leaving this now to go to the supreme court.

[applause]

elena kagan became the fourth woman confirmed to the high court and the second justice

nominated by president obama. he was -- she was sworn in as the 112th justice on august 7. next week the supreme court begins its new term and you can learn more about the court with c-span's latest book. conversations with active and retired justices and attorneys who argued cases, revealing unique insights about the court. this weekend and through december, listen to landmark supreme court cases on c-span radio. >> at no time during the interrogation and prior to his concession was he advised of his rights to remain silent, his right to counsel, or his right

-- >> this saturday, 6:00 p.m. eastern on c-span radio. panradio.org.p >> tonight, campaign 2010 debates. issues important to new hampshire as candidates compete for senator judd gregg's open seat. live coverage tomorrow of a rally held by a coalition made up of state organizations. leaders say they are rallying at the lincoln memorial for jobs, justice, and education. live noon eastern here on c-

span. >> jefferson davis fled enrichment with the union army on his trail. this weekend, a best-selling author on his book, "bloody crimes." find our full schedule at booktv.org. >> ben bernanke said yesterday that the unemployment rate -- remains too high. he has been watched to see if the federal reserve is going to take actions in the near future. his remarks came in a town hall meeting. this is a little more than an hour. >> this is a conversation with ben bernanke as he takes questions from teachers about the federal reserve and the economy.

ot sew and i work at the board of governors and i look forward to modering today's session. he the border by the federal reserve, we are pleased to host a group of 80 educators to teach economics and personal finance to young people. we are also joined via video conference by education from all over the country were participating in local events in 34 regional reserve bank in ranch officers as well as many who are viewing this via webcast. through this session, federal reserve system seeks to give you insight into our poll tonight today so we can support the work that you do a student as they strive to teach them how the decisions made by the central bank affect them, their family and the economy. today we are honored to bring to your federal reserve chairman, ben bernanke, who wants like he was an educator. before coming to the board of governors in 2002, chairman

kornacki worked at the level of economics and public affairs at princeton university. he also chairs the department of economics from the 1996 to 2002. chairman bernanke served as governor of the federal reserve system from 2002 to 2005. and in 2005 he became the chair of the president's council of economic advisers. he returned to the federal reserve to the chairman of the board of governors in 2006 chairman bernanke gervin dillon, south carolina and received a ba in economics from harvard university and a phd in economics from the massachusetts institute of technology. and i might add that chairman bernanke's wife anna is also a teacher. the thank you for joining us today, mr. chairman. >> thank you. rose forgot to mention i served two terms have been my camera rose school board. last night so i have some direct

exposure to public education as well as to university education. i do want to both you and all shirts today as educators are critical to the nation, to our economy. while students make for a productive universe and democracy. the economist got offered marshall once that economics is the study of people in the ordinary business of life. and i can't think of anything more fundamental than that. but in economics obstinance understand e decisions of million of people about what to produce and what to consume to determine what adam smith called thwealth of nations, our living standards. in particular, economics obstinance understand both the strengths and weaknesses of our free market systems. i'm sure your students have been major to understand the economic financial event from the next couple of years. the recent financial crisis was

was among the most profound crisis to financial stability since the great depression and its causes and ultimate remedies have been looking to need to be widely debated. the study of economics will light your students to join the debate in a responsible and informed way. one of the key lessons of the recent financial crisis is the importance of personal financial literacy. miniview teacher-studenthe ills necessary for their decisions. your efforts are of paramount importance in helping students understand how to save for the future and how to invest domenici make it grow. in retrospect, some of the people who are the most in the financial crisis bradman initiative by road, were signed financial crisis they shouldn't sign. today, students needed solid understanding of the benefits and the risks of borrowing money to buy a car or to buy a home into the affected too much credit card debt can have it

their personal finances. besides improving the personal financial decision-making, teaching her students economic as the bulls will help them as citizens understand and make choices about many critical issues that today confront our nation. the federal reserve works hard to advance financial literacy and economic education, both current programs a tough our work with other organizations. our financial education website provides easy access to free educationof materials, a resource search engine for teachers and scans for students of various ages and not flinch levels. some of the 12 reserve banks around the country for economic and financial economic education workshops for teachers. in other reserve banks periodically provide lessons and arsenal financed to middle and high school students. a number of the reserve banks run academic competitions for the middle-school, high school and colle students such as the fed challenge, econ bull and

other essay contest. i've had the opportunity and to act occasions to jude the fed challenge which is an opportunity for kids to learn what the fed does, learn about the economy. it's agreat experience and i've seen some really impressive performances from high school kids. also some reserve banks have open learning senator museum center lobbies that feature interactive exhibits and related educational programs. figure in the reserve bank february principi, which their 24 branches as well as 12 reserve banks, please inquire to see what kinds of exhibits i have. teachers hosted in the summer founders have provided the students with valuable learning experiences. i just wanted to thank you for accepting our invitation to join in this conversation. i appreciate your taking time away from your personal and professional claimants to be with us. as a central banker, economist and educator and as a parent, i do want to thank you all for your work.

it's absolute essential to our economy, central to our democracy, that we have well-educated, well-trained students. and i also applaud the ongoing partnerships between regional reserve banks and their educators. as i could express off my appreciation for reserve bank staff who were involved in court meetinthis meeting today. so again, welcome to the federal reserve, those of you want simulcast, welcome to this meeting. and i'm happy to take some questions. >> thank you. >> our first teacher with us today in the boardroom, would you please introduce yourself and ask your question? >> robert handy from dort high school in county maryland. what has been the greatest success as well as the greates failure of the federal reserve in the last 100 years? and if you are teaching a u.s. high school history class today, what is the most important aspect of the federal reserve's role in history you would want

students to understand? >> well, i hope that your students become and learned about the federal reserve as a very important institution i meant by the huge impact -- back to 100 year university, but to celebrate our centennial. the federal reserve was founded in 1913. and it's been as they say a tremendous part of u.s. economic history. i would say the greatest failure to start their is no doubt the great deprsion of the1930's, which the federal reserve made unfortunately an important contribution. the fed was very slow to expand the money supply during the great depression. as a result, it countenanced as safideflation or falling prices during the early 1930's. the fed was also insufficiently

proactive in trying to stabilize the financial system as you probably know about a third of all the banks in the united states failed during the 1930's, a tremendous collapse of our banking system. in those two things together are very important in making a good impression as deep and as long as it was. by the way, as we dealt with the financial crisis in 2008 in 2009, we try to take those lessons to heart. we try to make sur monetary policy was aggressive trufant deflation of a try to take whatever steps were necessary to keep o banking system from collapsing. so at least we try to history. i take one of the most are probably the most success of the federal reserve in the past century wasprobably after the period of the 70's when we had a lot of inflation. the federal reserve under chairman paul volcker by contemplation, conquered inflation and we now have very, very low-inflation, very stable prices.

in that process n the 80's and 90's, a cheat quite a bit of prosperity and economic in the united states in a lot of important contribution to that. going forward, i think students should understand those two elements of what the fed has done and has been done. in the first is financial stability. it's very important for the fed to contribute to keeping our financial system stable and dave. and secondly, price stability. over the central bank can affect inflion and keep inflation low and stable is good for economy and it's very important responsibility for the fed. >> thank you. next will go toward miami office office for a question. >> thank you. my name is nancy and i teach math at thomas jefferson middle-school in miami beach,

florida. chairman bernanke, our fight to rescue what are the greatest challenges that the federal reserve system faces over the medium and long-term? >> well, we certainly have in the near term and the medium term we have some very difficult challenges. first and perhaps for a mouse, even though our economy has stabilized and growing, clearly it's still a very, very difficult time for many americans. the unemployment rate is still almost 10%. flation is quite low in the federal reserve has the responsibility they were certainly not only policymakers that can affect the state of the economy i.e. any means, but we need to do our part to help the economy recover and help make sure the jobs come back to the united states. we have another beer important responsibility in the short term, which is the implementation of the new financial regulatory reform legislation, the so-called dog

frank act was passednd signed by the president in july and it is essentially the most ambitious overhaul of our system of financial regulation since the 1930's. and a great deal of that has to be accomplished, put in place by the financial regulators, including federal reserve and also including other regulators like the federal deposit insurance corporation, securities and exchange commission and others. but the siteas a very important role in putting that -- putting them in place. so those two very important challenges in the near term. long-term is hard to know. it's hard to know where economy be and what the d's role will be. based on what i've seen a few moments ago, they think we want to be sure to maintain price stability. we want to learn as much as we can about our economy so we can be even more effective in keeping stability i our economy. and i say one other thing, which

is that it's very important that the federal reserve remain independent, that he remained able to make decions for the economy based on our views of what the economy needs and not based on short-term political considerations. so maintaining our independence, maintaining our nonpartisan nature, which is focused on what is the best for the economy and not what is politically expedient. i think that's a really critical thing for us to maintain going forward. >> thank you, mr. chairman. now let's move to boston fed. the >> can't hear you. >> austin, i'm sorry. please and mute your.

>> i'm sorry, boston, we can't hear you. we'll go to the next and come back to you. [laughter] let's go to san francisco. we'll come back to you, boston. let's go to san francisco and then go work out the details of the mike. san francisco, can you please go? >> san francisco. >> san francisco, go ahead. [inaudible] is >> okay, tell them to hold on. >> fantasist go, i'm sorry, we can't hear you. >> isn't technology great? [laughter]

the >> the lady in miami was clear. we'll put you on hold until we get our audio fixed at pier. >> isn't an issue here? on me -- okay. >> anybody else got a question? [laughter] >> dr. bernanke, it you have spoken one point about the crisis of the media, not so much the media, but the domino effect

effect -- i should have been preped. the crisis of conflict and how the whole media plays in that it ours becomes a domino effect. and as we look at our session, reports come out of this session, what kind of role does the media play? >> so the question is about confidence and what role does the media play and confidence? first of all of you say the confidence is important. consumer confidence we follow very closely. people are more confident than they're willing to spend. they're more willing to invest and so that's an important period and business confidence is also veryimportant firms in order to hre, in order to expand their operations than it should be confident about the economy. now the media is no doubt they're important,ut i hope your students understand to be a little bit skeptical about the media because there's nothing

more exciting than when things are going well and nothing more devastating when things are going badly according to the media, right? so people can develop -- a student skimmer to develop an important skepticism for themselves about where the economy isn't what's happening, we'll avoid a think some of that echo chamber that can make the good times seem too hot and the bad times seem too cold. so again, education is getting kids to think for themselves, getting them to listen to a wide variety of sources, not just on television and how they might think -- when it's not. ifyou look from american history, if you look at the last 234 years or so of merican history, the united states has always prospered. it's come through tremendous challenges. it will come to these challenges. people have that perspective, but our confidence will be

stronger. how are we doing? >> other questions. yes, ma'am, and the yellow. idea back [inaudible] >> go ahead. [inaudible] >> so, you first he to say that the federal reserve is nonpartisan, so be very careful not to take one side or the other in terms of one fiscal issue or another. before i try to jump into that in one moment, let me just make sure that just to say how important it is that their kids understand the difference between fiscal and monetary policy. i think that distinction is often not clear. fiscal policy of course has to do with the federal government spending and tax plans and of course the federal reserve has nothing to do with that. we do is manage the money supply

which affects ort-term interest rates and therefo inflation and also affects growth. but their aretwo very different sets of licies a i think sometimes people don't distinguish those too. and again, the policymakers are very different because fiscal policy is made by the administration. we tryo buy someone we can, but of course they're responsible. where is the federal reserve independently makes monetary policy. and fiscal policy, with a very difficult situation because in the short run we have an economy which even know were in the is still far from all employment. until then that sense, there was a lot of desire to provide additional support to the economy. at least not to cut spending or raise taxes would be bad for recove. we had very long-term budget oblems as you know.

as you know, our society is aging and if medical costs keep going up, the obligations to pay medicare, medicaid and social security long-term situation. so we're kind of caught in the desired in the short run to be more expansive and in the long run to be more frugal and that's a hard combination. and i think is possible -- i think of biting those two in that way is the right way to go. in other words, whatever we can do to persuade the public that we -- and i say we as a untry talking about congress, that we are serious about tackling a longer-term budget issues, work which take the steps necessary to reduce their long-term debt. that in turn would give us more space, more flexibility to be more expansionary in the short term. so that's the challenge, is to find ways to credibly commit to

reducing our long-term debt. and in doing so, would give us additional flexibility for you decide to use it to help support recovery today. >> already, were goingto go back to boston to see if we can bring boston. boston, are you there? >> hi, can you hear me? >> yes, we can. >> hey, okay. good afternoon chairman bernanke. thank you are rejoining that the academy again. i name is bob walker and an associate professor of business and economics at middlesex trinity college, the crown jewel is committed to college here in massachusetts. my question for you as follow-on to the question you just answered. the combination of monetary and fiscal policies have helped to movehe economy and the right protection and direction, get growth has remained stubbornly sluggish. what do you see is the major contributing reasons for this? >> loafers, let me say one thing, which is i want to

commend you for your work in the community college. trinity college -- junior colleges technical schools. one of the great strengths of our educational system is that we have so many diverse ways for people to educate themselves and i think it's a real strength of our economy and our system. for those of you who aren't alternatives -- either a junior colleges for alternaties to the standard four year college. i think those are very important. in terms of whether recovery is slow, that's obviously something that we're very interested in and spending a lot of time investigating. it's not at all uncommon for a recovery that follows the financial crisis to be relatively slow. we've seen that historically in many other countries as well as

in the united states. the reasons for that are several. one is that the financial system is so important to our economy that if the banks, for example, have not recovered fully to health or the financial markets and i get functioning at the normal level, that is itself a drag on growth. likewise, if you look at household finances, one of the things that happened during the boom that preceded our financial crisis was that people took on a lot of debt. house prices for now. mortgage borrowing to buy up to loan-to-value ratios were very high and doload down paymnts. so a lot of people find themselves on the one hand worried abo job security. and on the other hand, finding they have a lot of debt, a lot of interest payments to make. and so they're cutting back. and what we're seeing is consumer saving rates are going

up, which is not a bad unit cells. but in the point of view of economy as a whole consumer spending is not there to drive economic growth way it normally would be. so that combined with the fact that our labor market is not yet really begun to take off, although it is expanding that there is still an air of caution and the economy, both on the part of households and on the part of businesses that is keeping from venus wrapped as a bug. that being said,the national bureau of economic research at the no declared the recession over in june 2009. now what that means, just to make sure everybody understands, means as a gymnast or the economy stopped contract team and since then has been growing. now it doesn't mean we are as normal. doesn't mean unemployment is way too high. does that mean a lot of people

are suffering. it does mean we are growing and the economy is moving at least perhaps not as quickly as we like, but in the right direction. and we want to make sure that that progress continues. >> thank you. let's go to san francisco again. >> hello, my name is luna hatfield and i teach economics at pleasantville high school in california. my question is, at is the most important lessons the student can take away from the recent financial crisis? >> host important lesson from the financial crisis? i think we need to address this for students, if i may, the macro level and the micro level. as a macro level and the point of human history and economics, with this crisis shows us is how damaging financial instability can be for theconomy as a

whole. i mean, people coming in now, you're soon as they think of wall street has been pretty far away and pretty irrelevant to their lives. but we found out that if our financial system is unstable or breaks down or severely damaged, but it's kind of like the nervousystem in the body of operating properly and you can get very, very bad effects on the economy as we've seen. so, fr an historical point of view or an economic point of view at the role of the financial system, the importance of financial stability if it are very, very important to understand that helps us think about the night to 30 some other important episodes as well. there's also sort of a micro level, which is more of a personal or family level set of lessons that can be learned from thecrisis. and i think one of the things that we all talk about that maybe didn't pay enough attention to is the financial literacy and financial

education. a lot of people who were in trouble today made bad decisions. that part too much or they purchased a home they couldn't afford. may borrow too much on their credit card. your efforts as teachers to help students understand the importance of financial responsibility, to help them understand what are the basics to basics of saving and budgeting? those are really critical. and student need to understand that for themselves as individuals and for the country, good sound practices, good sound behavior and in financial dealings is really important. and i guess i would say on the personal side were learning a lot of lessons about the labor market here. young people often is the case of the least experienced, least experienced labor market are

among the worst hit by the high level of unemployment, particularly minority young people. what dos that tell us? will among other things, it tells us we need to have kids who are well-trained, well educated, who understand the wide variety of basic skills in terms of thinking, writing, math, et cetera, so they an adapt and change and deal with what could be a very unstable situation. it's always possible, you know what can whope our economy will recover, but the world is changing quickly. and the more the kids are prepared, the better they'll be able to take advantage of technological change. and changes in our economy, rather than be left behind. >> thank you. now let's move to philadelphia. philadelphia, can you answer your question, please? >> hello, chairman bernanke.

i name is holly juran i teach financial and new jersey. my question to you, is what you like to see personal finance economic course departed for graduation requirements for high school? an ierview, what is an important issue that could be mitigated with financial education? >> well first of all, when new jersey into another, -- well, this relates back to the question i was just talking about. we don't know as much as we would like about how to teach fincial literacy. we had a number of programs here at the federal reserve where we have monitored different at times, different approaches to teaching kids about financial literacy. and some are better than others. but we haven't really found a magic wallet. and what i think is needed is two things.

one is we really need to do a better job of integrating financial education, financial literacy interpreter program. for example, when you're teaching math instead of just teaching abstract calculation, why not put it in terms of working out an interest payment or a budget? or we could integrated into history or civics or economics. so there's lots of ways to do that and i think, you know, i think god the more effect if way to do it. another way to make this more effect give is to tie it directly to kids on experience in their own lives. we know that people are much more prone to understand and want tolearn about seo mortgage nancing when they're actually in the process of buying a

house. so if kids are involved, for example in opening a saving account or doing other things, saving for college, then those things mean a lot more to them and the training was even hopeful. but again, to go back to before, this is so important for people at the individual level and for the economy as a financial system as a whole, when i was in school and when you're in school we had horses called home economics and didn't have much to do with economics. it had to do with and other very valuable skills. well, home at the time that is about knowing how to budget and how to save. that's very important, too. i think we need to put them into the curriculum so kids will have to lay schools. even going into college, because we see a lot of kids get into trouble even in the college years of excessive credit card debt and not been able to pay tuition and so on. so to go back to your question,

one of the main lessons of the crisis is that we as citizens need to be responsible for a financial dealings. we can put everything on the government. we can put everything on wall street. part of it is our responsibility and you teachers, you educators working with the kids, i hope the chill night that part of your curriculum because it is one of the most important things that kids can learn. >> thank you. now let's go to the st. louis district. st. louis, please ask yo question. >> my name is george bowling. i teach economics at st. charles community college in st. charles, missouri. mr. chairman, my question is according to what i've been

reading were some way, there's a conflict related to a thing should be and economic downturn. some people say the bank should be raising capital in order to make them stronger. others say they should spur the ecomy to take on more risk and living more to small business and households. what should be the goal? >> so the question is about, is there a conflict between banks building up their capital, becoming more stable on the one hand versus health of the economy by making loans to small businesses and consumers of the one on the other hand arid it's our view of the federal reserve that there is not a conflict between those two object is. and the reason is that what banks do is make loans to good borrowers. that's how they make good money. it's about maintaining relationship to the bars, making loans to good borrowers, that's how they build their profit and their capital. so we think it's good business. we think for banks to lend, we

think it's good r the economy to banks to lend. and so from our perspective, you know, as you know the federal reserve is not only the monetary policy agency, we also have very substantial role in regulating the banking system. so we tell our bank examiners to look at thbooks of the banks of the site take a balanced approach. and what i mean by that is we don't want to tell banks no, no, you can't take any risks. don't make any bones. just curl up sorted into a little ball and ignore the rest of the world. we don't want that. nor do e want them to make risky loans. we don't want laws that areot going to be paid back. that's certainly not what either. what want is an appropriate balance. what banks to make a positive powers that includes lots of small businesses who have been through a lot through this recession and they're still there and we made them to grow. we need them to hire as part of our recovery.

so again, there's probably a conflict in our policies and wille tell her examiners than what we tell the banks desert just got to get the right balance. you know, we don't want to be excessively risky. we don't want to lose money. we don't want to lead to people who can't pay back, voted to make umost people can be effective in reply to small businesses, a lot of households that it showed the responsible and that they're able to prepay what they borrow. and again, that's not just important for those individuals, but it's also important to get our economy going because certainly one of the reasons that growth has been sluggish going back to the question -- the earlier question, is that small business in particular not been able to get as much credit ashey would like are not being the engine for job creation that they typically are in the recovery. and that is one of the things that's holding us back. >> thank you. and now let's go to our omaha bridge. omaha, are you there?

>> my name is shauna coburn and i teach business at arlington high school in arlington, nebraska. [inaudible] however, the overexpansion credit could reduce the financial situation we're in. how do you propose educating consumers on maintaining the balance? saving and spending? and while this balance slow the recovery of our economy? >> that's a great question. in this the boom in the crisis came about because people took too much and consume too much of our too much. to get out of that want people to consume more, barmore has been more. what kind of sense does that make? it does but it takes an economist to understand it. when we get a moment to clarify. so first of all at a micro level, at the level of the individual family or high school

, we want people to be responsible as i've said several times already. we want them to make good choices. we want them to save enough. what make sure they don't take on excessive debt and that means i have to be frugal in their spending. that's simply the bottom line. so we're not encouraging people to be irresponsible. we think everyone should live within their means and to manage their finances as well as we can. so that's a given. let's take that as a difference. now that being said, through the economy as a whole, there has to be some sort of demand will put our fact reconfirms back to work. there's got to be some demand for the output production of our economy and we need that for recovery. so it's a bit of a conflict, a contradiction between those two things. there's a couple ways to resolve the contradiction. one is to understand that there

are components of demands for goods and services in our economy, which are not just consumer spending. that includes for example capital formation if firms are adding to their -- their gh-tech information technology, for example. or if the government is spending on purchase. there's lots of different sources for demand decided consumers. every important demand is ex-swords and folks outside the country. so there are sourc of demand decided consumers and we want to , as much as we can, when those to help our economy recover. but the other thing i would say to reconcile that micro and macro contradiction is that people can spend responsibly if they have th income. and monitoring me so would like to see if the labor market

recovery. the labor market has been growing. it's been recovering, but too slowly. unemployment is still too high. so to the extent of economic policies or decisions being made across the country while prolabor market grow and jobs be created. that's going to create incomes that will allow people to spend more, create more dend for products, create more growth in our economy. without being a responsible part of individuals because they'll have more come coming from jobs. so there's really two keys to growth that are consistent with responsible spending. one is to find other sources of demand, like investment spending, like exports. in the second is to give people the income they need to spend responsibly. and that means basically jobs. >> thank you. and now let's go to the dallas fed.

>> mr. chairman, my name is barry johnston. i teach at the colony high school ithe colony, texas. and first and unpaid plug, but the other question about having state laws or federal laws with regard to teaching personal finance. the state of texas does have such a lot and i can tell you that the building was program that the fed provides has been a big help to all of us. now, my question as, what do you believe would or could have happened if the fed in collaboration with the government had not taken the very aggressive steps it took during the financial crisis? >> this is a very common for important question and i thank you for asking that. and this is one of the very difficult areas. to put it quite lovely, a lot of

your students, a lot of people in the country say well, they build out wall street. once i got to do with me? .. that is what happened in the 1930s and that is what has happened in many other episodes. for example in the case of japan, japan had a major financial crisis in the 1980s which was the combination othe stock market crash in the land market crash which cause their banks to suffer severely, and

that severely hampered their growth for more than a decade. so, we know that a financial crisis can be very very damaging to the real ecomy. in september and october of 2008, we came extraordinarily close to a complete collapse of the global financial system, not just the united states at the whole global financial system. we had a meeting here in washington in october of the g-20, the 20-- 20 of the largest countries in the world and we talk about what we were going to do and we developed coordinating plans whereby in each country around the world we took strong steps to try to prevent the financial system from melting down essentially. now we didn't succeed entirely obviously. we had at least one major firm collapse. we had other firms that required government bailouts.

those things as they said were very distasteful to us. but, even though we succeeded in avoiding a much worse collapse we still had a tremendously sharglobal recession and i would say as bad as the recession was in the united states in 2008 in 2009 we were kind of in the middle of a pack. a lot of the countries around e world had worst downturns than we did and all of this happened following basically successful attempts to stabilize the global financial system. i can only say that if global financial system had really melted down and many firms had failed, if the ability to make loans had essentially dried up, if people had lost most of their investments, their savings accounts in their retirement accounts, we would not be today if leased on a recovery path. we would still be in a much deeper hole, something much

closer to the great depresson of the 1930s. so i do ho that, while clearly students understand that not everything the government did during the recession and the crisis was right, that's stepping into prevent the collapse of the noble financial systemas something that was necessary and it affected every single american in a very important way. i guess the final thing i would say is, i hope it willhelp people understand while there was a lot of money made available to address the problems of the financial system at this point it looks like we are going to get it all back, pretty much all of it. from the financial rescues. most of these banks have paid us back with interest. again not a great situation, not something we would ever want to do it again, but we are getting our money back so i would have to say that ths was a successful policy, not a popular

one but a successful one, and ain, as an economic historian, somebody who has spent much of their career looking at economic history both in the united states and other countries i firmly believe that we really had to stop that collapse of the financial system or else the consequences for everybody here, for all of your students would have been mh more severe than what we did in fact see. >> thank you. now let's go to chicago. >> good afternoon mr. chairman. my name s phil. i teach english at st. joseph's high school in south bend, indiana. i would like to personally thank you for your continued diligence during these tough economic times. my question, can you discuss what you see going forward as the strength and potential shortcomings of the dog frank legislation and what texas

safeguds have been put in place to prevent a future cret crisis? >> thank you. that is a very good question. the dodd-frank legislation, i spent the morning at the senate banking committee talking about the implementation of the dodd-frank acts. this was the omnibus financial reform that was passed again in july of this year and it is very very comprehensive. it is certainly by far the most comprehensive regulatory reform since the 1930s. and it makes a lot of fundamental changes in our financial system. to name just a few of them, it creates a financial stability oversight council which the first meeting is tomorrow by the way, which brings together the heads of all the regulatory agencies and says let's all work together to see if we can identify any risks that might be arising in our financial system. so one of the problems that happened before the recent

crisis was that everybody has their own little responsibilities but there wasn't really anybody in charge of looking at the system as a whe and what the, what this legislation does is greatly strengthens the provisions to require regulators ot just to look at their individual-- but to look at the whole financial system and try to identify risks that might be rising as the economy changes in the financial system changes so that i itself is a major change. in addition, the dodd-frank acts closes a lot of gaps that existed. we were just talking about the louts. aig, which took important steps today to begin to pay back the government was essentially not regulated anybody. nobody was paying attention to what was going on there. the investment banks like lehman brothers had very limited regulation.

there was not any legal requirement for them to be regulated. there were many gaps in up regulation of exotic financial instruments like derivatives so there were many gaps in many of those gaps came bck in for a very serious contributions to the crisis, so that dodd-frank act closes a lot of those gaps in creates new oversight responsibilities for the fed in and for the other agencies. let me mention two other things it does. what is it is going to create a consumer protection agency and we have been talking today a lot about financial literacy, about people who got into trouble in their mortgages or their edit cards. some of that is the fault of the borrower putssome of that of cose is bad or bad practices on the parts of the financial institutions. the federal reserve has been working hard on consumer protection under my chairmanship and this new bureau which will be within the fed, but

independent, will also be responsible for trying to provide those protections. the last element i wanted to mention which is new and important, is that fair or provisions now in the law that will make bailouts, both unnecessary and illegal. that is, should we ever come to a situation where big financial firm is about to collapse and that poses dangers to the u.s. economy we now have a set of rules that would allow the federal federal deposit insurance corporation to come in and sees that institution and windt down in a safe way that will not cost the taxpayers any money and it will not, at the same time will not create chaos in the financial system. if we had that three years ago or two years ago we could have avoided a lot of what what happens all so all of those things are very important

contribution stamp will help address financial risk, financial crises going for it. now, this is not a panacea. it is not complete. there is a lot to be done. as their hearing talks about this morning, passing the law is only the first that. the regulators have to implement these laws which means we have to devise a whole set of rules and regulations that will make specific concrete financial firms and other regulated entities what those laws mean specifically. we have to enforce those laws. that means we have to strengthen our supervisory a and make sure we have all the resources and talents we need to enforce those rules. that is a lot to be done and there are still things that even congress has to address. for example one of the major problems that arose was the collapse o june and freddie which were the two large housing

agencies which had implicit government guarantees but turned out to be, had to be taken over by the government because of the losses in the sub prime and mortgages and other lending so that fannie and freddie reform is something that needs to be done and is not part of the bill that was passed in july. that is an example of something that needs to be done going forward. i guess one last thing, one of the things that made this crisis so difficult is that it was absolutely mobile crisis. it was all over the world particularly in the europe and that required a great deal of coordination and speaking for myself i worked very closely with central bank governors around the world to be coordinated on lots of different measures that we took and that is going to be necessary also as we all go ahead and impose new rules in the financial marketplace. we don't have to have-- want to

have one set of rules and u.s. and another set of rules and friends because what we need to do is make sure that we are as coordinated as possible and in fact we are very much involved in international meetings. i just came back two weeks ago from basel switzerland which is where many of the largest countries get together to talk about coordinating and making consistent our bank regulatory standards. so the international part of this is very big. it is going going to take a while for us to not only get a good system in the u.s. but to make sure it is consistent and coherent with the finanal regulatory systems of other countries so there are a lot of challenges ahead. we are not home free by any means but i do think this legislation which is, as i said, by far the most sweeping since the 1930s will give us a fighting chance to set ua system that will prevent what

happened in 2008 and 2009 from happening again. >> thank you and now let's go to cleveland. >> i am phil peters. i take-- teach economics. i am here at cleveland with 100 of my fellow teachers and there are classes we encourage our students to follow the current economic events and their students read diversions and politicized new stories. chairman bernanke does the federal open market committee hold divergent views and what would you recommend to students on how to reconcile the differences leading to their own import and opinions? >> that is a good question. so first of all as i am sure you know but just to provide some context the federal market committee is a group of people who sit around this very table here at th board room ght times a year to decide what we should do about monetary policy and it consists of seven

governors here in washington, plus the 12 reserve than presidents from around the country, five of them get to vote at any given meeting. so as i said that is called the federal market committee. it was established in the 1930s and it is a committee at again makes monetary policy. there is plenty of disagreement on the federal market committee. people have different views. that is iced the case. it may be more the case today because we have such a complex situation. we have had an economy again which is not recover from the deep recession. we have had a lot of unusual and aggressive actions on the policy front, some of which people had different views about. so there certainly is different views and disagreements. my attitude about that is fed to people who agree on everything all the time, one of them is redundant.

so it is good to have different views. that is why do you want to have the committee. one of my ex-cleagues at winston wrote some very nice paper showing that the committee for certain kinds of complex decisions can actually do a better job than a single person and we can all talk to each other to try to make sure we are all comfortable with what our strategy is going to be so there is to sit remit. what ultimately the committee finds is as we work together to figure out what the right thing is for the country and we tried to do that in a way that is independent of any legal considerations. now for your students broadly, let me just e frank here. i think the one thing that is unfortunate is that people are becoming more and more listening only to the side of the gument that they are to believe in, so there is not enough-- you know if you are conservative you listen to only conservative media and if you are liberal you

listen to only the promedia. i think it is important and i'm sure you all agree that we hear both sides of the story and listen to all different points of view that we use critical thinking to try to figure out what they believe in what is right. we investigate, we do research and we get the facts. that is the way forward. just taking extreme positions and shouting at each other is not going to get us anywhere. what we need to do is have students and u.s. teachers or one of their primary sources for this who are open-minded, critical and willing to think think about a variety of perspectives. so disagreement is a good thing. it creates a new idea and it forces people to look at all the sides of the question. but, your students should-- they should not be overly influenced by a single media or other source. they should learn to hink for themselves and that is one of

the most challenging things. while i know what is really important to get good test scores and all that kind of thing, thinking for yourself, that is something people will have for your whole life if you can help the kids get there. >> thank you. now let's go to new york. >> my name is john, and i teach in raleigh, new jersey. i teach u.s. government and contemporary market issues. my question is what role will education play in the future of our economy and how can we better prepare our students for financial success? >> the question is what is the role of education in the future of our economy and i would say it is probably the most important element of both our national future success and individual success. just think about how the world is changing. first of all technology is changing radically.

one of the key explanations that economists give for the increasing inequality of income in the united states and in the world has to do with technology. people who are capable of using sophisticated technologies earn high incomeskern high salaries, are productive. people who do not have that education in those skills did not do nearly so well and that is part of the reason why income inequality has increased in america. what other trends are there? new industries. new forms of energy, new forms of climate related industries. again, technology, creativity, scientific and other engineering training, all those things that will be critical for economic success and for personal success. and the third trend, globalization.

you know we all compete globally now. companies will move to the country where they finthe best trained workers, where they have the most advantageous tax loss etc.. so if we want america to remain in a place whre the best jo are, we have to make the best workers. that is the onlyway to do and it and that requires interned skills and training. as i said before, i will repeat a couple of things before. one is althougthere are some weakness in the american educational system we have some important strengths. one of our strong university system but another as they already mentioned is that we have such a diversity of ways for people to get skills and training. in the current economy there are people of course who have been out of work for a period of time. a be the job had is never going to come back.

there are ways in america to get new skills. we talk to community college folks before. they have lots of programs for people who are not 18 years old or older than that, and so that diversity of ways of getting training in skills is really a strength of our economy and our country. and the other is again another theme that has been throughout this hour, if you want to be successful, having the skills to get a good job orto launch a business are important but you also need to manage your money well and that is where financial literacy and financial education comes in and again i do, am pleased to hear the gentleman fr texas say that that was a state requirent. i think that is actually becoming the case in ore places around the country but i do hope if it is not your class that you will push your school, pusher district to make sure the kids

have at least the basics of financial literacy before they graduate. >> thank you and now we have one last question and we will go to minneapolis for that. >> good afternoon and mr. chairman. my name is donna. i am the business education teacher at clear lake high school in clear lake, wisconsin and recently i had a banker as a guest speaker in my classroom. he stated that therare two areas that he would not lend to and they are manufacturing and agribusiness because those interesting-- industries are leading the u.s.. do you agree? >> the question is about to industries, agribusiness and manufacturing. now agriculturealways has ups and downs in parts of the country doing ll and maybe other parts doing poorly but generally speaking agriculture is one of the most productive sectors of the united states

economy. as you well know there was a time when half the population was involved in growing food. now oes two or 3%. they not only feed the whole country but they have enough left over to b. major exporters to people around the world so again the economics of agriculture goes up and down and there are a lotf government programs and it is complicated but basically this is an are where the united states has been very competitive for a long time. the other question was about manufacturing. dare i think the popular perception may be a little too pessimistic. the united states remains the world's strongest manufacturing country. manufacturing plays a very important in our economy. productivity in manufacturing has been gowing in a very rapid rate, faster than the rest of the economy. the united states leads the world that many sophisticated high-tech types of

manufacturing, so it remains a very strong sector in the united states and a very important source of exports to other countries. another observation to make is that in this recovery that we are watching unfold, manufacturing has been a big heart of that. many sectors, service sectors and the like have been growing very slowly, and manufacturing has quite in part because it is people to-- so the story of manufacturing is better than i think is often portrayed. now that being said there is one dimension which is important which is that because manufacturing has been so productive that is they become more and more efficient at producing using robots and other kinds of sophisticated machinery, the number of workers that manufacturing jobs has gone

down even as the output of the manufacturing sector has gone up. there are far fewer manufacturin jobs than there used to be and there are particularly fewer sort of low skilled manufacturing jobs than there used to be. so, to the extent that there used to be a lot of people who were on production lines and making automobiles for example, those kinds of jobs clearly are reduced considerably and rom that perspective manufacturing isn't as big a part of our economy but i would say going back to our discussion of education, you talk to manufactures and they say well, it is true we had to lay off some low skilled workers that we are still trying to find machine machinists, weers people with high skill. can't find them so that eople with high skills, there are plenty of jobs in manufacturing and in the economy in genera so that is one more example of why

education is so critical. manufacturing in the united states is a growing industry. it is an important part of our economy. it is not as big and an employer is it used to be but it does play a very important part, important role in our recovery and another international trade. >> thank you. that is it. >> 3:30 on the dot, that is really impressive. everybody, can i just want to say as rose mentioned my wife is a teacher and she has been a teacher for a long time. she recently started her own school and there is nothing more important than what you do because you affect the individual lives and careers in the aspirations and the abilities ofur kids and that is just really critical. and i thank you for taking the time to come talk to me and to visit the fed and they just want to wish you the best and what you do and keep up the good work thank you. [applause]

[captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2010] >> we will begin at 8:00 p.m. eastern with california's governor. after that, we will show you a debate from the arizona senate. finally, we will had to colorado for the governors' debate members of congress have returned home to campaign for the midterm elections in november. before leaving earlier this week, both the house and the senate passed short-term spending measures that allow agencies to continue to operate in the new budget year starting today. some congressional leaders have

said they want to vote on extending some or all of the bush tax cuts that expire in january. as always, follow the house, live on c-span. content of local vehicles are traveling the country as we look at some of the most closely contested elections. >> what is keeping you up at night these days? >> all of the money that the government is spending. i worry about what is going to happen to my grandchildren. >> we need to turn it around. we have to have some fiscal discipline come to washington, d.c. i have three kids than that i have the same fear -- and i have the same fear. we need to make some changes. >> i totally agree.

thank you so much. >> i don't think we should raise taxes in this economy. it is a mathematical. i think an economy like this, raising taxes is generally a bad idea. >> if times were better? >> i say, let's put everything on the table, solve the problem you look at the benefit side first before raising taxes. that is the general philosophy that i have. >> on the democratic side, you have dan seals. it is his third time running.

then on the right you have the political newcomer, bob dold. he lives in highland park. both of them have three kids and make over $100,000 a year. they are both from the same economic class but on two different sides of the political spectrum. it district that has historically sent the republican to congress and voted for a democrat for president. that makes democrats think it is -- that makes it something that they can jump on. it stretches from the north shore suburbs, very easily come

a very wealthy, very well educated suburbs of chicago, like highland park, and it goes a little bit west into some more moderate incomes. then it stretches pretty far north which are largely poor. >> no, no way. you can never get a job. a lot of people that want to support their family, it is not everybody that wants to just sit down and do nothing. there are a lot of us that want to work and want to get a job. where do we start? we have no start nowhere. we need something successful to help us support our families instead of being out here in poverty doing nothing. >> what kind of lead you will

take in congress to address this regulation? >> i think the of voters are most concerned just like everywhere else in the country but maybe more so -- jobs, jobs, jobs. in addition to that, texas. you have part of that district that has been hit hard by unemployment so, they want to hear their candidates talk about how they are going to put them to work. >> the biggest challenge for me is for people to understand the differences between myself and my opponent. they want someone who can make the decisions to get our economy back on track but are not willing to compromise on their social values as we do so. i want to protect women's rights. my opponent wants to weaken environmental laws, i want to

strengthen them. my opponent wants to privatize social security. i think that would be a terrible gamble to make and i am not willing to add $2.20 trillion to the national debt. >> we have to put people back to work by creating an environment that allows the private sector to grow, at expand, and added jobs. my opponent has been in line with its policy and the democrats about growing the government as the answer. i do not think that is the case. the better way is empowering individuals and small businesses to grow, to invest, to expand their business. >> both candidates are trying to run in the middle, and they are running into each other dan seal. dan seals is going after dold on social issues.

he is trying to take him on the environment. all of these other hot button issues they're really trent well for democrats in the district. bob dold is going after taxes and budget. he is trying to align this on the health care bill. he is trying to portray them as wanting to raise taxes. that is the other side of the district. they make up the majority of voters. they need to really come apart from their parties because the parties are not popular anywhere across the country, it seems. dan seals really needs to stand aside from the democrats. i think voters are not interested in making sure there is a democratic-controlled congress or necessarily a republican-controlled congress, so they need to portray themselves as independents.

i believe the last time in 2008, $10 million or more was spent on both sides. the kennedys themselves will raise between $2 million and $4 million. you have a lot of interest groups because this is a key place for democrats that they think they can take a republican seat. you will see both congressional campaign committees dumping $1 million, $2 million, or $3 million in advertisements. >> c-span's local content of vehicles are traveling the country as we look at some of the most closely contested house races leading up to the midterm elections. for more information on what the vehicles are up to this season, visit our web site, c-span.org.

>> explore the reality behind a science fiction, elizabeth einstein, with michio kaku. has written over a half-dozen books, including his latest, "physics of the and possible." sunday at noon eastern on "book tv." >> she was very self-centered woman who, you think, the mother of the father of our country, taking pride and pleasure. but we do not have any credit >> his soon-to-be published biography of george washington. it is the first large-scale single biography of our first

president. >> you are an optimist once. now, all you offer is a miserable, pessimistic view about what britain can achieve, and you hide behind the deficits. >> the newly elected labor party leader from the annual labor conference, sunday night at 9:00 on c-span. >> the commission studying solutions for the u.s. national debt held its final meeting on wednesday, focusing on the federal budget process. president obama created the commission last february with an executive order. members of the panel will issue their recommendations by september 1. this is 2 hours 10 minutes. mber 1st. today's meeting was a little more than two hours. well, again, thank you for being

here. thanks to all the members for their hard work and total ded kagdz and bruce reed and company staff deeply appreciated and toers kin bowls, my fox hole buddy when the shells were raining down on my poor bald dome, a shocking thing. i couldn't believe it. where were we? no. moving on. we will get something done in this commission and i think the american people will be proud of it. not to be said that the long-term dennisons of d.c. will feel as much en newsed as they might be, maybe even abused in the process, but just a word about this remarkable village by

the potomac, 36 square miles surrounded by reality. it's an interesting place. a note about our fine friend, andy stern. now the subject of anonymous allegations and our retributions from former union members who used the electronic fog machine to shower material upon us all and spread their venom. i felt the fang in their legs for about 35 years, but still walking. to say quite clearly, that i think any person who uses an anonymous blog, to say it quite clearly, is a jerk or bonehead or a boob. just a personal opinion. if you have something to say,

say it and tell who you are. don't wimper and hide out and democracy is not a spectator sport, but it's not a license to demean and denigrate and belittle those of us who were in the fray while the creep who sneaks into the national debate by the sub trifuj of the anonymous babble commands the allegiance of only the cynical and the disgusted and the alienated in society and the fellow zealot, of course, is also the one who sits it out while the rest of us of this 18-member commission and millions of americans try to make things work and lend their actual names to every cause as

patriots and citizens and not just nameless detractors. the only place in america for the private and anonymous expression of a strongly and sincere view is the ballot box. is the one, the only one. they get taken apart and do it the american way. thank you, colonel. if i could pick one partner, i would pick al simpson and for those of you here today who want to save social security, i can assure you that the one thing alan simpson talks about is simply making social security solvent for 75 years. you don't have to worry about allen simpson. i want to thank all of you all

for coming this morning and for the time and effort that all of you have put into this. it's taken a lot of time and it's taken a lot of energy over the last five months and you all have really been supportive and i deeply appreciate that. what i appreciate more than anything else is you have checked your party credentials at the door and you've come in here in a totally non-partisan manner to try to come up with some solid recommendations to bring this deficit down, something that we must do for this country. it is critically important. i think everyone that we've had testify agrees with that. we had the fed chairman come in. we've had six cbo directors and we've had leading economists from both the right and the left and we've heard from experts in every field over the last six months and all have agreed that

we must address this and we must address it now. all believe we have a fragile economy we must protect, but we have to bring down this deficit in the not too distant future. all have recommended to us that we reduce cost and spending across the board whether we call it a tax expend itch you are defense or non-defense spending or mandatory spending of any time. it's not going to be easy and it's not going to be fun and in many cases it is going to be popular. and sacrifice on the part of all americans to get there. and how to get there from november from the work you're going to be doing in your home districts. we've got very tough decisions to make, so please keep your calendars open. this morning we're going to have three presentations and the first dealing with performance

budgeting and something that all of us in the private sector are certainly familiar with so are you in government and we'll talk about secondly reducing the overlap and duplication that exists in government. our spookers this morning are paul posner, who is director of public affairs programs at george mason. he'll discuss the opportunities to integrate performance information into the budget process before going to george mason. he spent many years at the gao, the governmental accounting office where he was a managing director for federal budget at intergovernmental issues. he would be followed by pat dalton and matt lawrence. miss dalton is managing director of gao match rl resources and environmental team and st. lawence is a managing director of gao's defense capabilities

and management team. we thank all three of you for coming and testifying today and we'll start with dr. fosner. >> thank you, mr. chairman. i want to thank the commission for conducting this hearing today and recognizing that performance and budgeting are not oxymoronic. that in fact, there are windows of opportunity that we have when we have major fiscal challenges like what we're facing today to come to grips not only with the fiscal challenges we face, but with the performance challenges we face in government. the idea was best expressed by one former budget director who said budgeting is about going after weak claims, not weak claimants. i always thought that was a good motto for budgeteers to follow regardless of party. i think performance has become more prominent and inside the

beltway in washington and in states and in local governments and around the world partly because of the growth of government and government has become more important and it it doesn't matter which administration, which party and there's been a variable agenda explosion that's brought issues to the doorstep with amazing speed and private troubles and increasingly solved with distracted driving out of wedlock first. these are things that are dumped on your doorsteps and you have to face. in doing so we transform government and government is no longer about delivering the mail and delivering the social security checks on time. those seem easy by comparison. now it's about cleaning up the chesapeake bay. protecting the ports from threats on homeland security, solving traffic congestion problems and making sure all of us use more carbon -- and a

whole range of people and sectors in our society and the non-profit private sector when you think about cleaning up the bay, you're thinking about the problems are distributed so widely, it's not just the big polluters and the farmers and it's the people who build shopping centers. it's the people who build new homes and development. it's population growth that's causing the debate to be choked up and that while these problems are widely distributed, you know, it's government burden in some sense to be accountable for solving them even though it it doesn't have all of the tools at its means or many of the tools at its means. this is why we have a set of problems and the solution to problems is highly decentralized but the blame is highly centralized and that gives rise to, you know, questions. if you're going to be managing and if you're going to be in the congress, you have to focus on how can we improve the value

that we're getting for our money? increasingly, we're holding leaders accountable and as this slide shows, leaders of both parties have kind of articulated the same, basic objective whether it's president obama or president george w. bush, they've all pledged before they came into office to ferret out these weak claims and to examine the performance of government and make sure that we kind of take this responsibility seriously, and i think in some ways what i'm going to talk about and run through some slides with you today is one of the success stories in government. we don't talk about many of our success stories. we talk more about the problem, but in fact in the past 20 years we have, regardless of party, increasingly focused on performance, collecting better information, holding agencies could accountable and increasingly thinking about the way we make decisions in performance terms and that's

something that has penetrated throughout our government as it has, as i say, throughout the world. in some ways when you look at the history of what we've done here it breeds cynicism and it keeps pushing the rock up the hill and we can't quite get it right. we have one initiative after the other, starting with the hoover commission and management by objection, et cetera and it certainly is a checkered history, if you will. kind of a zig-zag, but nonetheless, the trend is up and the fact is that national leaders are want willing to just let a single effort kind of fall by the wayside. they want to strengthen this and so i think there's a movement upward and there's something compelling about -- yeah. i'm sorry. i should have said feel free to interrupt. i know you will, but -- >> just a -- these sort of things have been talked about for a long time, correct?

decades, maybe scores of years? >> absolutely. >> in the private sector toers kin's earlier points, this happens all of the time. it's just the normal course of first. every year you say how do i do more with less. it's just the way it works. it it never happens here. despite all of the discussion we have about increasing the effectiveness of government, it always seems like here's the description we would use. if someone had 1,000 people today and they had to do 10% more next year, they come in saying i need a budget for 1,000 and the inflation for all 1100 where adz in the private sector we would say okay, that's 1,000. we have 100, so that's 1100. i need 150 more of productivity and now you have 150 people to get this all done. that just doesn't seem to happen here. why is that?

>> well, there are several reasons. one is that, you know, the private sector has a pretty strong, compelling goal which is to improve net income and profit. that's the bottom line that's under stood and there's a metric that you can buy into and understand how all of the investments play into that and governments when you take a single program and we have conflicting objectives and we want the irs to collect as much revenue as possible and not bother taxpayers. we want the forest service to cut down lumber and protect it the spotted owl and protect the god-given right to ski on federal land. how do you balance those objectives? moreover, we're talking about some of the things that we're increasingly taking responsibility for. it is not clear whether adding 20 people or 100 people is going to solve the problem. you're not essentially responsible for the problem. you're trying to incentivize people throughout the country. state and local government,

homeowners and the like. you think about how do you prevent wildfires. you say you're the forest service. that's not a simple production function. it's not an input/output equation. it's getting people to locate their homes in different places and possibly less attractive places and it's fireproofing and changing the way we build homes and it's getting insurance companies to start penalizing people if they put their homes in harm's way. there are some communities in this country that put a big x on the driveway if homeowners have not fire saved their homes and they don't offer the same level of fire protection. i mean, that's the level that we're talking about here. the national government has a responsibility. political leaders in washington. the question is it's a very complex set of problems we're taking on here. that's part of it. we don't agree on all of the different goals we have and we really sometimes don't know how to do it. >> if i can just build on that a little bit.

even in the private sector, for example, i would never tell people that you need to cut costs, be more productive and that's at the expense of quality, delivery or anything else. the point we always make is a success is achieving two seemingly incompatible goals. so, yes, i want lower inventory, but i expect better delivery. i expect lower costs, and i expect lower quality. that just doesn't seem to happen here. each with all of your suggestions which we had a chance to go through, all good, but how are they ever going to happen? what do we need to change in terms of the dynamics of the budgeting process and how the executive branch executes. what do we have to fundamentally change to make this stuff ever happen? >> those are excellent questions and i think you're right. the world is not part of the private sector either, and i understand there are tradeoffs here. i think part of it is is getting

better at knowing what we're trying to do and measuring it. it's a supply problem and once you've built that bridge, getting decisionmakers to use it and, frankly, that's been some of the problem because we have different things we want from government and reducing cost is only one of them. that's why i think windows of opportunity you're dealing with provide some discipline that a private corporation faces when they're facing competition. that's what motivates private -- to keep their -- keep on their toes. i think we're at that point in government now. certainly we're at that point in state government and local government and that's coming here that we face those same set of pressures. i think that could possibly, as we've seen in other countries, provide the source of motivation. >> we have senator conrad. >> just two other points.

private sector people like dave tend to think of the government as though it were one thing and someone like a ceo were sitting there making decisions. two points, really. sometimes that's true. if you feel what's happened to the government workforce over time as it took on more and more jobs as paul was saying, the government workforce has want increased and it is doing more with less people and they're contracting out. the other point is there is the congress and if you -- con are o and one of the conflicting objectives is we want these planes that will do the same thing, but at least cost and we want to make a job in a hot of people's history and those are

incompatible. senator conrad? >> i remember having a professor in business school who said you can't manage what you can't measure. and we have a real lack of metrics. just in going through some material and knowing your work. you're very into metrics. and that's what we need. we were having a conversation in one of our last meetings. senator koburn and i got into an exchange about the defense department. you literally do not have an accounting system that allows you to manage that department because as we heard from our defense expert who was here several weeks ago, they can't tell you how many contractors they have. in fact, we asked them for a

range and the range was 1 to 9 million. that's a pretty big range. >> i think that's right. there are two sides to this equation. one is the benefits we're trying to deliver which are often very difficult to measure and we've seen the debates on no child left behind. what are we trying to measure on school performance? that's a big debate. there is no national agreement on that. certainly want at the top. federal agencies, you know, spend what they're budgeted, but unlike the private sector, there's very little attempt to do cost accounting where you take all of the indirect costs and all of the fringe benefits and you associate that with the program and say here's the total cost of achieving these objectives. we generally don't do business like that in government. those costs are segregated in budget accounts and you leave it

to some poor analyst who will pull it all together in a spread sheet, but we don't budget and provide incentives for them to manage that way. >> like a lot of challenges, and i think alice put her finger on it a little bit. we tend to take on the whole subject at once instead of dividing this up into discreet parts and proportions. some of those discreet parts we could deal with more easily than others tied in with what senator cop rad said with the lack of metrics. i do believe that there are some areas that you can measure. and other areas where metrics become because this is public policy as opposed to making the projects and one for me is the

administration's pledge to increase to double exports over the next five years. you can measure exports and you can measure five. so i've been pushing the administration. benchmark and to the degree where we're accomplishing that objective. and i found they run into existence each there. without naming names what are your benchmarks. who showed the degree to which -- i forced them to. i want you to come back to this committee and every six months to tell us what they are and next year and six months later. the main point being is there are some areas that we can quantify and measure and should

be. >> i think what you just did, senator baucus is exactly how we make progress. it's getting oversight up here that, you know, many agencies, ten years ago jail would go knocking on the door of nasa. we know that to the person and how many contractors? well, gee, it could be anywhere, it got to the point where gao tried to estimate it and the reason was nobody asked them. you have to have talented employees because you have fte limits and they hold you accountable for your onboard strength and they don't hold you accountable and nobody budgets for contractors that way. >> until the kinds of questions change and the theme of my bottom line here ultimately. i think congress needs to get more into this game.

>> my experience has been managed in the public sector and the private sector and having managed in both the state and the federal level that there is less emphasis here on goals, objectives, and timeliness on real accountability. there's more emphasis on the incremental spending rather than on the continuation budget which is a big part of what you're really spending and third, the definition of what is a cut is very different here in the state government than it is in the private sector. here, if you get an inflationary increase, you get a 5% inflationary increase and you cut it back 25 million, you get a cut whereas we would consider that an increase in the private sector in the private sector. two very, very different places to manage, i assure you. we were the home for performance

measurement where we spawned a lot of it and one of the things you learned at the local level is you're responsible for delivering the garbage and you have total control over that furpgz. that's pretty easily measured. you know how often you can do it and what the quality should be. when you're at this level you're sometimes five or six steps removed. you have many different hands in the pie and with very ambitious and difficult goals. that's a big part of why there's a dirfference here. >> if i could, i would like to make out a point that they made and that's on the service metric of some kind. because i would say that even in business, we don't just run into what's the quality of the product. there were more subjective things that we have to try to measure and i'm a big believer and we have this discussion all of the time. it's want just about cost. you also have to measure effectiveness and give you an example and something i think is

reusable here and our hr people. our human resources people. they used to measure the speed in which they filled a new job. it would seem like it would make sense because you want jobs to fill more quickly. >> you started the discussion about wait a minute. how do you know that's a -- then you answer the conversation, how do you measure that? that's impossible to measure. well, what we came up with is is a survey at the three months and 12-month point after a new hire where you survey the manager and say are you happy with the person that we helped you get? now you end up with a quality metric, a performance metric on something that was considered unmeasurable before and what you end up saying is yes, that does get better over time and people start focusing on both. so i think there may be more opportunities even if it's

surveying your customer base. somebody is unhappy with their post man. if you do a statistical example for an electronic survey of people who want to participate. are you happy with your guy. with the fire fighters. maybe you surveyed fire departments and say what do you think of these guys? i can't imagine there isn't a way to start coupling effectiveness with cost in a way we don't today. >> think that's the spirit of this movement is to start focusing not on theic puts and what you do when you come to work every day. it's what outcome you're achieving and i have examples a little later on the coast guard, for example, that maritime safety is irresponsibility on how many inspections they did. then they realize i don't have any idea how many deaths they're averting. what's the rate of death in the maritime industry. they realized we're not going after this in a smart way. we need to start training rather

than inspecting and people not knowing what they're doing is causing a big problem and a huge reduction in accidents and death as a result of that. >> this is a hot button for me, but i said it pretty well. not everything is that's important is is measured and not everything that's measured is important. it's irrell vent what it is that you're trying to get done and putting some thought into whatever cost you're putting in, what objective you're trying to achieve and find a way to measure that no matter how difficult. that's where the opportunity is. i'm not going cover every single slide. it reiterates the point that there's been a historic shift in budgeting. dollars, people and accounts to focus outputs and outcomes as government has become more critical to the national life and this is true at all levels

of government. a little bit about what do we mean by performance budgeting and i think one of the things that we put in the past is that if mrs. johnson waves a wand and every agency should do it for cost analysis and it wasn't linked to the budget, after ten weeks the bureaucrats don't pay attention. the same with nixon's mbo and management by objectives. good government and it's not linked to the one process that people pay attention to and if people up here don't buy in, those two things are critical. these things become one-year wonders. but if you get a link to the budget and if you have an anchor to the congressional statute with strong oversight then you can have something like we had the past 20 years which is performance and it's a sustainable part of the management agenda. that's when we started realizing we have to link performance and

budget to better budget as well as to improve the sustainability of these initiatives and it starts to put meat on the bones. what do we mean by performance budgeting and when you look across the country and other nations, there's kind of a graduation degree of difficulty, if you will and what we're talking about. the easy thing to do is presentations and if you look at the huge vol ums of federal budgets and documents. we have lots of performance data in the do you means and that's almost a no brainer. the next question is what basis are you going to use to make decisions. what's the fundamental orientation of your budget and appropriation accounts. are they salaries and expenses and construction and a number of field offices or are they some kind of result? that's much more difficult and we haven't made much progress at this country and the national level. other countries like france and

italy have significantly overhauled their budget beings to focus on performance. then you talk about the next stage would be setting targets for managers, and i have a slide here -- i'm going backwards. okay. and i'm getting ahead of myself, and great britain has for many years has something called a public service agreement with its agency managers and this is an emergency manager with the health department and the public service agreement was and here what they're saying is we're going give you a budget for a certain dollar amount and we can expect these kind of improve ams in life expectancy and we're going to expect real changes and improvements and death rates

from disease, et cetera. those are laid out in the contract and theoretically if you don't achieve it you have a lot of explaining to do and a lot of that is not controllable by government. they reach for these outcomes and they really try to change the basis of accountability. that performance targeting and we don't do that by and large in this. we don't set it linked to target and hold people accountable and getting back to the previous slide which i'll get to in a minute. so that is -- we haven't reached that. performance-linked funding, that's probably the biggest challenge and maybe the most difficult which is, you know, can i make my budget figures linked to performance in some formulaic way. in other words, if i improve performance i'll give you more money. if i induce performance i'll

give you less money. it may work in the private sector, if i have kmart, for example, has opportunities to expand and a new business that's striving in virginia and you want to put more money into that and that becomes a profit center and in government it doesn't work that way. we have problems with the -- we don't cut drug treatment programs and we usually increase them. the government has different models for how it it budgets in the private sector. and the last performance assessment which i'll talk about in a few minutes, going back and looking at the base. what are we going to get for our money and the systematic assessment. so i'm going to talk about the keys to making this, if we were

to do performance budgeting how would they do it? there are four basic success factors and one is defining expectations and two is addressing the structural alignment and in other words, making the budgets and performance plans align with each other. three is increasing the supply of credible measures and outcomes and four is promoting demand fp. those four things is what it's going to take to institutionalize performance budgeting, and i think we have a long way to go on all of them, basically. the expectations is something that very frequently, public officials particularly up here think that we can take budgeting out of it and that's the furthest thing from the truth. furthest thing. once i start budgeting performance, the conflicts can get more intense. you're only going to achieve this much infant mortality reduction versus this much.

but the point is many people believe that once we have performance measures, we should just automatically budget. so when your program improves you should get more money. we just illustrated with the drug abuse, that's not a realistic model for governments and budget is a function of performance and needs and equity and a lot of other judgments and they inherently will always be that way. so what's more realistic is to say can we make performance be a part of the discussion. not the driving decision rule, but can performance become part of the way we think about budget choices? i think that's the choice we have. and then to do that we have a couple of pacts we have to do. one is building the supply chain. creating plans and measures and outcomes that are credible and have a link to the budget account and there, i think, we're part of the way there, but

with government performance and results. we started in 1993 and really, that's the basis for everything we've done since and that has been sustained at the agency level. i think one of the success stories in government. and as i illustrate with these examples, because of gpra there have been significant changes at the agency level. not in congress. not much attention has been paid to performance plans, but the agency that's used these performance metrics to perform these metrix. i talked about the coast guard before, reducing marine accidents by being more systematic about the outcomes they were trying to achieve. the veterans' health network is another good example. they have health networks throughout the country. they were able to pilot best practice and cardiac surgery and apply those practices to all of the health networks and achieve significant reduction and cardiac morbidity.

they first had to measure cardiac morbidity across their hospitals. they hadn't done that before. that was the first step. having done that, they were able to research and analyze what worked, evaluate and then apply that to the way they managed and we really got improvements. so gpra has want only produced a pile of reports and plans. it's actually improved performance in selective areas. >> another question for you. these are some good examples. one of the things that if this were occurring in honeywell, for example, if this was something i wanted to do i would look for a business or a plant that had comprehensively done it well and look at that as a best practice and kind of measure everybody against it, how closely are you getting to that. as you look through all this, is there any agency or sub agency or whatever we'd call it that you would point to and say these guys get it and they really have been doing this.

if we could have the rest of the government the way these guys are, do we have something at the best practice place? well, we don't have a best practice institution to analyze these things. gao doesn't work like that, but particularly the coast guard and va have really -- and nhtsa have really led the way in some sense for federal agencies. they take this seriously and they use it to manage their employees and their programs. there are other examples from our government that we can point to. the park service for years never collected any data on its 300 and some parks. as a result of this they started collecting data on visitors and environmental issues and now for the first time they're managing parks centrally rather than having fiefdomes in each park. that's a significant accomplishment. there's not one place and want a

shining star. there's a number of places that have done different things. there's an example of the federal government in the administration of grants where it's done well and those people who follow to a tee, best practices and there isn't a grant that goes out that doesn't get followed up. every one has 100% follow up and according to the grant they withhold money. they're actively managing the grant and it's the only place in the federal government where they do it. there's a best practice that's happening right now where they are infinitely better than anybody else who administers grants. if they can do it anybody else can do it, but we're not making them do it. >> okay. gpra built the bridge, the supply chain. the question is who's going to walk across this bridge and use

this information and that's been the real problem. the bush administration to its credit developed this part tool, program assessment rating tool, and it raised the sailing for this issue and as a result, almost forcibly injected performance into the executive formulation process, not the congress, executive formulation process. so they charmged performance from a tool for agencies to manage to a tool for omb to use in budget formulation. that was a significant achievement and had some consequence. one is it really was an information that congress was accessible to it and congress didn't feel they were in the game. they actively resisted in some cases. so that became a significant problem as well as, you know, kind of collecting and the budget accounts and look at the

bigger picture with the budget accounts where we're trying to keep job training across 80 programs or whatever it is. the park tool wasn't well suited for that and nonetheless, it continued to move the ball forwa forward. and it's the park scores and gradually improved over time. some people say they improved because agencies got better taking the test. the question is did it improve really the way programs were managed? i think one of the things you can say is there was a tremendous fear on the agency of being shamed and shame is a powerful inducement in government and elsewhere and as a result, agencies devoted more resources to getting their act together particularly on evaluation than they ever did before. now with the obama administration they backed off from p.a.r.t. and they have the high priority performance goal and the agency has select

numbers of goals and examples are up there on the screen. these goals are then monitored totally by omb and one of the important things that's just happening is the house has passed legislation and the senate has -- and the government affairs and home larpd security committee that would institutionalize and put this high priority goal into law and require agencies to do these and require omb to establish a set of federal government wide help priority goals which i think are very important. our experience here with a long lasting focus performance to give you an insight on the countries and omd has done some studies and showed many nations have been at this for years and years. and just like us, the use of performance and i apologize, this chart is a little vague to read. for the most part most budget

offices use performance to inform, but not to mechanically determine budget allocations i think is the right answer. and hardly any government throughout the world, the advanced world are using performance data to eliminate. by and large. one of the exceptions to that is when nations are in fiscal trouble, canada, netherlands and australia and they call it program review which is something i'll get back to in a minute. when i go at the end and program review, they do that baseline review you were talking about. they take groups of programs and they examine those weak claims and they look for performance. what are the challenges? basically, i listed some of them

in and we talked about some of them already. to really make performance more of a part of the way we budget, we have to first of all, get support agreement on the goal. we have to find better ways to link the outcome. we have to fundamentally build support among non-federal actors because they're critical to achieving anything we do in government and most importantly, we have to get congress in the game, and i wanted to show this one slide which i developed when i was at gao which illustrates the performance cube as we call it that most programs these days are managed in the three-part way. and the management performance delivery is how well the agency is managed and that's the right hand side. how well is the agency bureaucracy managed and then, too, what kind of partners are they relying on and how well do the partners buy in to the federal goal and the like and

we've seen significant cases where they don't. we try to implement real ideas across the state and most states said not on my block, you're not and then the tools we use. we use a range of tools, direct spending, contracts, loans, tax expenditures and the like and all of that goes into making a well-managed program. very difficult to pull up. i'm going to talk now just a bit about the -- final point. how can we build a more strategic focus where we look more budgets across program areas as they affect broader mission goals and they call this a strategic approach to budgeting. the way we structure here in congress inhibits tradeoffs across programs achieving common goals. whether it's higher education of

which i'll show you an example or food safety and a variety of other things and i know my colleagues at dpshgs ao will talk about. we don't do that very well in the government and certainly in the congress and we certainly don't have much insensitive to examine the base. we do examine at the margins and so the question is can we as either part of your process or going forward in the future create a part of the budget process, if you will, that focuses on the higher level of what we're trying to achieve and all of the different tools that we're using to achieve those goals. part of that is want only talking about spending programs, but tax expenditures which this chart shows and the red line now exceeds discretionary spending. revenues now exceed discretionary spending. and for the most part the tax

expend ite expenditu expenditures. sometimes we administer them, sometimes we provide them to the tax code. an example of this is the housing portfolio from a cbo report. you can see just the tax expenditures for homeownership far outweigh the spending for homeownership. on the other hand, spending for rental housing outweighs tax expenditures so the ratios differ, but most programs are -- most policy areas are portfolios of program and i'll go over some of the details and the same is true with the education budget function which is a rich array of different tools. discretionary mandatory loans and tax expenditures. when you look at one area and drill down the higher education subsidies and we're drilling down to promote affordability and access ability. and gao has done some work that show that these things are not only not through together and coordinated, but they create

significant problems for the consumer. 27% of americans, for example, don't take the tax credits that they're eligible for and there's offset. you can be -- if you take the tax credit you have to count that against the income you're eligible for for the pell grants and vice versa. so there's tremendous leakage that happens in the system. to make matters more importantly, there's been no evaluation done of the higher education portfolio or major programs to understand how do they affect accessibility of higher education and how do they affect a graduate and unemployment? we don't collect that kind of data. we don't do those kinds of studies and we also have found that while we're providing higher education assistance at the front door, at the back door, universities are raising tuition as a result of this. so in some ways we're undermining our goals because the actors we're using, you

know, don't necessarily share our goal. i'm at a university, i understand how that works now. even before. so i think what we might be looking for and i'll end here, is a way for congress to kind of develop a leadership agenda, if you will, where either as part of the budget process or possibly separately, you take a portfolio whether it's housing or higher education and several a year and this is how we've seen other nations do and you drill down and you look at all the tools that are in part of that portfolio and then you try to drive that through the centralized budget process and you try to do some kind of a process where you get all of th get all the committees to do a joint kind of set of oversight hearings, coming up with recommendations and possibly, a reconciliation bill that's

performance-based. this is the kind of thing that arizona did in the early part of the 2000s. they took a couple of areas. one year it was juvenile justice and had all their committees focus on that area. there was a leadership push to get that done. i think that's what we need from the congress, you know, to start driving performance at the level that it really matters which is these broad missions that we're trying to -- >> the state should be enforced to do that because of the budget situations. as an example, in north carolina, no longer do you get funding just for enrollment growth you have to meet specific retention and graduation goals. goals of the number of baccalaureates per cost of producing the baccalaureate compared to your peers and are you making progress or not making progress? and, again, historically, what they did, if you were -- it was all access and nothing about

productivity and outcoming. >> right. i know that must be an interesting process having been in the university, how that plays out. that's exactly right. i think the point you're making is fiscal necessity sometimes forces you to do things to change the way the game's played. >> in my experience it's almost no different than a leveraged buyout. as another example, i had two universities come to me and they both wanted to add additional classrooms. i asked the question, what's your current utilization. and we actually, as dave said, we collected the data but nobody ever looked at it and when we looked at the data we saw one was at a 20% utilization and one was at a 60% utilization and neither got the money. but you have to -- we were forced to make it because we had to look at throughput like any other organization does before we were awarded the resources.

>> okay. i think i'm going to stop there in the interest of time because i know we have a lot of things you want to get done. i don't know if there's other questions or issues to talk about with performance. but -- >> if i could go back to the beginning. personally i like everything that you had to say about this. this whole idea of looking at what are you measures outcomes and not outcomes that are easily measured but what are you trying to get done. i like the whole idea. if i could, though, getting to your last pages on making it an agenda, all the different subfunctions that kind of thing. >> yeah. >> what would you suggest all of us we actually do here? what has to fundamentally change? how do we change it so this becomes a part of -- you can't just tell everybody. now, do it. it doesn't work that way. especially when you have this institutional inertia that's

been done. >> what would you recommend beyond saying everybody needs a performance objective? >> i think what it involves is on a selective basis taking a couple of areas and this is what we learned in other countries really works when you have the fiscal heat on -- and an incentive to do this -- taking a couple of policy areas whether it's higher education or whether it's housing or whatever kinds of issues are important to the congress, and having the budget committee kind of become, just because they cover the whole waterfront in some senses. and organizer review, like a program review like we've seen in other nations of those areas. in concert with the other committees of the congress and possibly setting some kind of targets for spending cuts and tax expenditure cuts that would

be enforced through reconciliation like a performance-based reconciliation process. i long thought we ought to think about moving towards a performance resolution for the congress on top of a budget resolution or as part of the budget resolution. >> you know, with the budget committee function, i've often thought we should stick with annual budgeting but the more i am exposed to what happens here, i'm increasingly of the view we should go to budgeting every two years and spend the other year on performance and oversight. and i think that's a recommendation. if we did it thoughtfully, could carry a lot of weight from this commission. and look, i will confess, i've

been opposed to it. i've thought there's -- i know of no institution any significant size that doesn't budget annually. but the reality is, we've fallen into a pattern in which we are only doing a budget every other year in any event. i was successful in getting one in an election year. you go back to 2000 and we've only done it once where we've gotten a budget in an election year. i was able to do that in 2008. but you look before and after, it doesn't matter which party is in control. in the election year, we tend not to do a budget. so let's do a two-year budget in the off-year and let's spend that other year drilling down and doing oversight and doing

performance. i think it would help change the whole culture of budgeting in this institution. and i do think that's something we should think carefully about. obviously, there are others we have to visit with, other than those around this table in order to get this adopted but i think it could make a meaningful change in the way we operate. >> congressman ryan, don't you -- >> i agree with that. i've been a supporter of this for a number of years. this is a cornerstone of a budget reform bill and it's the same point. do your budgeting and proper rating in the aproper rating in the off year and spend your time seeing how the money is being spent. all we do is aappropriate money these days. so we spend our time spending money we don't spend our time finding out how well the money

is being spent. if we do discretionary spending on the election year we up the levels and that throws our baseline way off. if anything, you got to obviously have an off-ramp for an emergency in the even year, because things will happen. that's why i think the emergency set aside is appropriate and those two proposals, a set aside for emergencies that's tightly defined with a budgeting along with discretionary spending caps gets us where we want to go. >> i just wanted to re-enforce this. i've been doing the budgeting for a long time and i think it has a couple of advantages in addition to those that have been mentioned. namely, that the agencies get more planning time because now often they don't get their budget until after the fiscal clear has started and it's all

very helter-skelter and if they can plan for a two-year budget and get it on time, it's a lot better. the defense department was converted at one point and did submit two-year appropriation requests. the congress resisted it and on the grounds that they thought it was a loss of control over what happened. actually, i think you gain control because you can make more changes if you're doing it in a two-year framework than you can on a very short time on the horizon. >> if i can just say, the problem on defense is that they went then to a practice of supplementals that really hid the ball from congress. so you got to find ways to guard against what is the way to get

around this and we're geniuses here getting around our own rules. you have a circumstance when you have an endless supply of supplementals coming through here and that defeats the whole purpose. >> congressman? >> i agree with ken on many matters including never underestimate the creativity of the elected official to get around statutes that they have helped write. but i believe that it's important to recognize that real really bi-annual budgeting. we measure the inputs to a program and don't measure the outputs. so if you want to show that you care about the veteran. if you want to show that you care about the elderly it's all measuring the inputs regardless

of the performance. and also, the only time that we get any oversight around here is when we have bifurcated government. that's the only time. it should not be used as a political tool. it ought to be institutionalized regardless of who occupies the administration, congress has to do the oversight if we want to get a grip on our budget but i wanted to add my voice, indeed, paul and i i think, have been working on this for eight years, so far to no avail but hope springs eternal. >> thank you very much. we'll go to ms. dalton now. congresswoman? >> before we move on, i wanted to say that i think the bigger gorilla in the room really is the defense budget which

accounts for 55% of the discretionary spending. and we have so much work to do in order to make sure that performance meets the expenditures which they don't even know at all and we've discussed this at length. you know, we need to, i think, especially focus on that. i was on the government efficiency subcommittee of the government reform committee and the gao helped us. but every single place that we would shine the light on that defense budget, be it credit cards or airline tickets or whatever it was, there was incredible abuse that the department didn't seem to know about at all. >> when the range of contractors you have are somewhere between one and 9 million you know you don't have very good accounting. thank goodness we have senator coburn who has provided us a

great look into the defense budget and is going to be enormously helpful to us when we get down to doing our jobs. ms. dalton? >> thank you. thanks for the opportunity to be here today to discuss the work on duplication and overlap in federal programs and other cost-savings opportunities that we've identified. and i had headed the gao defense team and pat andly be sharing the presentation. she'll come in the later part but i'll cao through the first set of slides with you. if we could move to the next slide, please. the commission's role is very, very important and we believe that gaos work has demonstrated the need for this effort. for the past decade we've been doing a lot of work looking at long-term fiscal simulations and all of this analysis has shown that the federal government is on an unsustainable path. we also produced a report back in 2005 that we called "21st century challenges."

this called for the executive branch in congress to work together in examining the base of federal government. we noted that this effort was needed for multiple reasons. one demographic trends, changing national security threats. homeland defense threats. global interdependence and also, evolving threats in other areas. >> i'm sorry. i know i shouldn't interrupt but building on paul's presentation, in your view, i saw you had some great recommends in here. how can gao help to implement the point of measures outcomes and not just inputs so you get more of a sense of effectiveness of spending? >> right. i think -- >> how can gao help? >> many ways. as you know, we cover can federal government in looking at programs all the time. but it's a multipronged problem in that starts in many cases

with the poor quality of the data to begin with. we point that out and we make recommendations. for example, the department of defense, the area i work on in a day-to-day basis still has significant financial management problems and issues that have been pointed out and it will be at least several more years before they get some of their financial management systems updated and their data more accurate. it's a long-term challenge. that's only a piece of this. the other thing that we can, of course, assist with is pointing out and continuing to comment on the quality of the metrics in plans and agencies produce to guide them. there is significant weakness there. and then, of course, we look at how well the programs are performs against either their goals or the metrics that have been established and find additional problems. and make recommendations to imthere. going further, the work we hope to be doing looking more on duplication and overlap, we also want to look at options in some

cases, for, perhaps, restructuring or taking some of these issues further than we've taken them in the past. >> and that same question for you that i asked paul earlier, is there any agency that gao would look at and say -- when you're trying to combine the input, the cost and your also measuring quality outcomes, is there any one you would look at and say, they're the best of the bunch. you can argue they're not perfect but these guys seem to be doing something and we ought to try to spread that approach, that best practice across the board? >> i don't think we could identify a particular agency at this point. we've seen pockets and programs. paul gave a couple of good examples. i think we see more pockets. but we also see a lot of challenges in a lot of the area where the quality of the data and the nature of metrics and if

if he kous of measuring against performance needs to be dramatically improved. to continue, as you know, congress -- >> i think that's a big deal that she can't point to a single agency that's a best practice. >> nobody home. >> yeah. again, moving forward, congress has part of the pay as you go act of 2010 mandated that gao identify and report annually on duplicative goals. senator coburn was key sponsor and this will enable us to build on our work on duplication and overlap and identify additional opportunities for achieving greater efficiencies. moving to the next slide, we'd like to cover a few topics. first we'll provide examples of their fragmentation in federal programs and we'd like to summarize some of the other key

cost savings opportunities that we've identified in our work over the past several years. we'd also then like to discuss some of the key challenges that agencies and the government as a whole face in trying to reduce or eliminate duplication. one of the problems here is, of course, the inner increasing inner agency nature. a lot of the challenges that government faces because agencies more and more have to work together to solve key national issues. and then findly, we'd like to talk about our planned approach to address the mandate on duplication included in the "pay as you go" act. next slide, please? during the past two decades, we've completed over 200 reports as a rough estimate, that highlights the potential for duplication, overlap and fragmentation in federal programs. our work has shown that redundancy in some areas can be beneficial if it's, there by design and to either foster

competition or provide emergency backup in some areas like defense or critical infrastructure where a single point of failure could be catastrophic. >> i've asked for a lot of those reports and they're excellent. here's the question. you all put out a report that highly accurate, unbiased and sometimes challenged by the agency. have you studied your output versus the response by congress in eliminating the problem? it is an important question because what happens is we ignore what the gao says and don't fix the problems. and the reason -- have you all ever done analysis to say here's all the recommendations we made over the last two years. what did congress do to respond to it? >> i think pat would want to chime in on this for sure, also. we've been going through that process as part of figuring out what additional work we need to

do under this new mandate and i think again, it's a multipronged answer. in some cases, executive agencies may not have taken action. some of these problems of duplication overlap may actually be more just an inattention to good management practice and senior level attention so there's rom for improvement there as well. in other cases it is more complex because we've found that -- >> i want to comment on how responsive congress has been to the recommendations gao has made. >> i will continue on that, also, because i think in several areas the problems have continued or the issues of overlap have continued, because they can also involve policy changes as we talked, paul mentioned the area of federal higher education, grant assistan assistance. it would take legislative reform to address those and involving multiple committees and different jurisdictions so it would take an integrated effort among the congress to, perhaps,

prioritize and take on a few of these issues. >> i think a lot of our follow-up has been on the executive branch as opposed to the congress itself on specific issues. we'll comment at times but we've never done it in total. at times, through our regular reporting, for example, every two years we issue a high-risk report toe congress. we look comprehensively at an issue and say what's happened? it's a high-risk area for a variety of reasons and in that case we may, in fact, point out that there's been action by congress or there's not or, in fact, it's gotten worse. >> the largest at-risk money we have outside of the defense department, a portion of that is in the defense department and over 50% of those projects fail and has congress responded to that? no. and so the -- one of the issues people don't want to talk about it is we get great recommendations but we don't act

on them. and the problem is congress. it's not the agencies. it's not the people who work in civilian federal employees. it's congress. and i think it would be very interesting to see from gao, here's the recommendations we made the last three years and here's how many got followed. that's a report card on congress by the gao. and i'd love to see that data come. because i think it would be helpful and in us fixing the problems that ail us. >> can a comment on that? >> sure. >> i -- having requested and been at hearings where the gao has done incredible work, i agree, except to one extent, i think sometimes the work of the gao exposed in the committee hearing does force some action by the agencies. but i think it would be wonderful to see when there's

been recommendations for congress to make changes how many have we really done? i think that would be very, very helpful. because the work that you do, the product is so incredibly useful. the findings and the recommendations are always so helpful if they were implemented. >> thank you. >> thanks. >> moving on, as i mentioned, there are cases in which duplication overlap may be appropriate but our work is shown that fragmentation and overlap are often the result of a adaptive government. as new needs are identified the common response is to layer on new programs and activities and this, of course, leads to proliferation of roles, responsibilities and overlaps among federal agencies. next slide, please? we'd like to do next is just talk about a few of the examples from our wide body of work where we've discussed and identified

examples of duplication and overlap. these examples illustrate the range of issues that could be included as part of a government-led process to examine the base of federal spending. first, gao added food safety to our high-risk list in 2007. because 15 agencies collectively administer over 30 food-related laws. this is led to ineffective coordination and inefficient use of resources in addition, more integrated planning and coordination, we've recommended that the oversight of food safety be explored and examined. another example is federal food assistance programs. typically we spend about $60 billion a year in this area. and we've noted that this is through 18 programs that have emerged piecemeal over the past several decades. we've made recommendations to the secretary of agriculture to identify and develop methods for addressing some of these

inefficiencies. however, this is an area where the work is also recognized that there are tradeoffs in targeting services to specific populations being served, such as the elderly or children. some of these programs are not, again, food assistance in general but a more targeted. so these may raise issues again for the congress to the extent that consolidation may need to occur. >> what happens? i mean, if there are 18 programs and we're spending $60 billion and you all make these recommendations that can make these more efficient and more effective and still meet the needs that congress specified. what happens when you make the recommendations? do they just go up on the shelf? >> we have an active process to follow-up in terms of what the agencies are doing with the recommendations. and over time we report that a fairly high level of the recommendations get implemented.

i think one of the things though is that we often tailor our recommendations to the kinds of things that executive heads can do. better coordination and taking care of some of the better business practice issues that are impeding efficiencies. the more changing recommendations we make again may be where agency heads either have to work together and that's much more difficult, to insure this happens or, again, when there are matters for congressional consideration. >> she's being way too nice. i'll give you an example. the census. gao said census is in trouble. census has a no-bid contract on a device they can buy for one-fifth of what they contracted for. the device never met the program parameters and they spent $500 million on a device that failed to meet its mission. and then paid a performance bonus on top of that.

they recognized that problem two years before it was going to be a problem and it was denied that it was a significant probably the leadership of the census bureau. and the commerce secretary under the bush administration. so they're giving us the information. we don't act on it and the administration doesn't act on it. and i can give you 100 other examples just like that of recommendations that they've recognized that are problems coming and they'll get worse, it's just like i.t. they keep telling us and we don't fix it. is it a lack of time for you all to follow-up? >> one of the things you talked about without the bi annual budgeting and if this happened in dave's company and they didn't follow up those people would be out the door and you get some people in there who would do the job. what's the follow-up mechanism here? >> the follow-up mechanism is

members of congress routinely don't like to do the hard work of oversight. and there's a couple of reasons for it. one, they don't get the attaboy credit at home. they didn't pass a bill to take care of somebody's problem so it's much harder work to do effective oversight because you have to understand the issue as well as gao does, as well as the agency does, otherwise you ent up with pie on your face. so there's a jeaneretgenera gen >> but it seems like with the buildup of debt and we have to operate more effectively or the nation as a whole will go broke, that there be every incentive now to follow-up, follow-up, follow-up and make sure the money we're spending at least, is being spent wisely. >> i'll tell you what it is. we don't prioritize spending. we throw more money on top. that's what congress says every year. a lot is discretionary and clearly, congress has the ability on an annual basis these

days to address these issues but when you're throwing more money on top of every other program, growing everything when you consider a cut in a decrease in the increase of growth, you don't prioritize and therefore, you don't use the reports and use these metrics to prioritize functioning programs versus nonfrungs no nonfunctioning programs. we do caps on spending and force congress to prioritize. we might get somewhere. but without spending caps and where we just raise discretionary spending every year and we don't open up mandatory accounts but for six or seven years that's the kind of government you get and that's what we've got. >> mr. chairman, i want to agree but also disagree with what i've just heard. i don't think the so much, run-away spending. i don't think it's so much that we don't follow the words of gao and others who do the oversight. it's that we have particular

interests. each and every one of us. and when it comes time to take on your interest, i'm okay. when it's time to take on my interest, no way. so that's what happens. think of brac, the base closure process where we had to downsize the size of the military. not one community had a base that felt its base should close. i don't blame them. it's in their community. they don't want to see the base close or all the shops that provided all the services to all those folks, all the military personnel was based on those military grounds. same thing occurred with regard to the health care bill. we had every type of interest group come in to talk to us about how they were too important to cut. and it's going to happen again. i hope the gao has an opportunity to go through the report because they made some very good recommendations and they also identified areaed where we need to cut. to paul, paul's point, paul, in the last ten years, the size of

the education budget grew about 1%. the size of the defense department's budget grew by over 100%. most of that cost came as a result of or the increase came as a result of the war. >> i'm looking at the numbers. >> are you talking about the department of education's budget? >> 2001, $40 billion. >> department of education budget in 2010, $46 billion. over ten years it grew $6 billion. the department of defense budget, $316 billion in 2001. department of defense budget in 2010, $693 billion. >> they got a triple digit income from the stimulus bill. >> but it is in certain education programs and when you look at the whole budget of the department of education -- >> it exploded -- if you look -- >> take a look at the numbers in the budget and by the way, as we

found out a couple weeks ago dod's budget doesn't incleude te military. i think gao which i think everyone would consider a credible agency to tell us where we could do is good accounting, has identified, i think, areas where we can really do some true investigation to see where we can try to make the government for more efficient. the reality is we're going to have everyone who has a particular interest will speak up. that's the nature of a democracy which isn't bad. but let's not fool ourselves to believing that head-start programs have caused federal government to go into massive deficit where we have major spending where the congresswoman just said, areas like dod which are very important. homeland security, veterans and so it becomes very difficult for us to make the changes that will give us the savings we wish to see and provide the efficien

efficiencies. that's why we have to have these open and transparent conversations because at the end of the day we get the accountability from the agencies that can do the oversight. it's whether we, in the political process, have the courage to make the decisions that those people have identified. >> senator coburn? >> i think javier has identified the problem and the word is "parochialism." nobody when they take their oath mention illinois, oklahoma, north dakota, montana, wisconsin, california. it's an oath. and our problem is we put parochial concerns ahead of the best long-term interests of the country. he didn't say it that way but that's really what's happened and how we've gotten out of control. and the american people smell that and that's why it's really important what we do in this commission is we could actually start a trend that would stop that. so that we would all be

dedicated, even with our own political biases and our own philosophical differences to try to be doing the best right thing in the long term for the country as a whole and the paradox of that is, that gets recognized at home based on the valor of what it is. and it's not a negative. it becomes a positive, except we, too often, are too worried about the next election cycle to really think in the long term. so i think you're on to something explaining what's actually going on. we lack the courage of our convictions to do what the american people want us to do. >> and it's so interesting. every single witness we've had has said that what we're doing now is unsustainable. so it's not like we don't get it. but we're going to have to put some of these parochial interests aside and really step up to the real problem. jeb? >> we may be talking apples and oranges here.

i don't have a department of education number. i have a o&b table that says function 50 national defense over ten year increase 1d 36%. and budget function 500. education function increased 149%. i know that's not the department of education per se. it's kind of cross agency. we may be speaking apples to oranges here and let's face it, we could zero out the department of defense and zero out the department of education and still have a massive structural debt that we barely made a dent in. so this is a very useful conversation and i would love for us to move to any facet of performance-based budgeting but chairman if i could address one of your issues and to some extent echo senator coburn. why doesn't congress accept the changes. it's a cultural focus on the metrics of input.

perversely, if i go and i accept a gao report or a inspector general report, i may end up actually saving money for the agency and then i become liable in the body politic, for cutting their funding. the culture does not reward efficiency. the culture rewards inefficiency and so part of this is changing the culture and the american people are going to have to help change the culture of congress. but i think that's turning but i've seen it over and over and all of the sudden, look at when we're speaking of i.t. and every aspect of the private market, you know, i.t., the cost has gone down. it's become more efficient. but if i found a more effective commuter system or -- computer system or i.t. system for the department of education and it was more effective and i saved 10% i'm liable for cutting their

budget 10%. in -- that's the answer to the question. >> let me add a note. you often hear me come up with a remarkable anecdote. first of all, if you torture statistics long enough eventually they'll confess. i learned that in the law practice. if you torture statistics long enough, eventually they'll confess and you're all right. you're correct. but you remember the golden fleece award? they would say, what are you doing with that award, grazing corn or wheat? i came back to old bill and i looked up how much dairy money he had brought to wisconsin over his entire tour of duty. we're in the elevator and i said -- bill, old, pal, the golden fleece award is very

popular. i have a figure that you've brought this much dairy money back to your state of wisconsin over your entire time here. but he said, al, you don't understand. these are little towns. these are towns of 400 or 800 people we have to keep them going. i said, yeah, but i'm getting fleeced on that one. and old bill, he said, i guess i could quit using the phrase. i said, don't use it on me in wyoming because we're all in this huge, huge bring home the bacon and the pig is dead. i said it before and the people now who are getting thrown out or will be thrown out are appropriators. what an interesting concept. that's where you wanted to be. the high purple. the crowned royalty of house and senate, to be the appropriators. i think that game is coming to an end. >> senator, in wisconsin we say milk is thicker than blood.

so i'm just throwing that out there. >> senator conrad? >> this conversation to me, as i listened to it, i think this has been a very good conversation because we're getting to the heart of the culture. some of all of this is true. some of all of it. congressman really put his finger on it. as a budget committee chairman i can testify, paul can testify. there's an interest behind every dime that's in the federal budget. and most of them are well-motivated. the problem is, the way it works, you know, let's take education. we all know what's happened. we got a proliferation of

programs all well-intended. and there's almost no coordination. it's probably actually hurting people's uptake and use of the programs because it's so convoluted and complicated. there's so many contradictions between the application of the programs -- what qualifies? what are the income tests? what are the asset limitations? i'll tell you, i think if we as a commission, tried to simplify the recommended simplification and went right through education, had a consistent set of standards for what it takes to apply and qualify, we would not only save money because i've often wondered, how much is in the administration of these programs? how much of the money actually gets out there into the countryside? how much of the money gets stuck right here in an agency in

washington? tom, you are right to raise the issue. we don't know. i've asked the question repeatedly on education programs. how much of this money actually gets out there? and how much gets locked up in bureaucracy here? how much gets locked up in bureaucracy at the state level because they take a haircut. when he sends them money for their distribution, sometimes i'm shocked to find out the state taking a 20% haircut to administer federal money. there is a tremendous opportunity for us to make a big contribution here. >> i would like to actually hear the rest of the gao presentation. can we to that? >> absolutely. i do think before we leave this, i think it's important to say

that the recommendations that this commission ends up making are going to be relatively easy for people like al and i to vote for because we're going to be everyone's ox. it's going to be tough and painful and it's not going to be particularly short-term popular. but we've got to count on those of you who run for public office, too. and that means you're going to have to set some of those parochial interests aside and do what's in the best interest of the country because what we're doing today is not sustainable. thank you. >> thank you very much. we have other examples in our presentation but i'd like to turn for a minute to national security issues if i could have the next slide? and just point out a couple of examples from our work where we've identified duplication and potential overlap. first, wanted to focus on some of our work on unmanned systems, that have shown that there's

potential for a greater commonality in sensors payloads and that could lead to potential better use of resources. in addition -- pardon? page 7. page 6, sorry. for example, also in our work in the intelligence surveillance and reconnaissance area we found that dod is planning to procure a wide array of different types of plat forms and improvements and as we looked over their plan for managing this effort which is into the hundreds of pages, we've seen that it's not often well integrated and doesn't necessarily make it apparent what the highest priority efforts are. one of the issues here is that dod has been invested in a lot of platforms but there's a need to processing abilities that dod makes good use of the information they're collecting. moving on to dod health care.

i'm sure you all know that the dod health care costs are rising rapidly. each service still has its own major medical command. although dod's pursuing limited consolidation as part of the latest base closure round. it decided not to pursue more fundamental restructuring in 2007. they looked at a series of options to include moving to a total unified medical command approach but there are other options on the table at that point. in light of the rising costs, we're looking now at their progress in implementing the more modest recommendations but this may be an area that warrants further analysis. yes? >> relevant but not particularly on point. do you know about the h.e.a.t. program? the justice department and hhs found about $60 billion of medicare fraud annually? so they're working together.

justice and hhs is. and they've tried to root out this fraud. and i wondered if you're aware of that and if you are aware, how that's working and so forth? >> i know we've done a wide -- quite a bit of work in the medicaid area. my area tends to be more defense so i'm not familiar with the details of that work. do you have anything pat? >> i don't have anything specific. we've been doing quite a bit of work in that area along with improper payments and fraudulent payments across the government. >> they estimate $60 billion paid out fraud lently every year. they charged 465 defendants with fraud in the last -- i'm not sure of the period of time but my sense is that's a very -- we need to be much more aggressive. >> we've done quite a bit of work and have identified a fairly significant potential forrer for

forrer -- for inefficiencies and we can provide more reports on that. >> that will created a better culture. once there's a sense that you can't get away with this stuff and you're going to be caught if you try to defraud the government, i think that will have an effect on a lot of other areas. >> if i could build on a point that both senators baucus and coburn have been making, we're looking for suggestions. could gao just pull together a list of recommendations over the last five years and what those suggestions are worth and were they done or not? that might be an interesting list for us to have because everybody comes out saying that things can't be done or it's -- we're perfectly administered. our process is perfect today. and that's kind of what's implied is you say, i just need inflation. it might be interesting to have that list of last five years, here's the recommendation.

here's how much it was worth. was it done or not? >> we certainly could do that. >> okay. >> thanks. >> i thought you would argue. me. i was prepared. that was very helpful, thank you. >> actually, on an annual basis we follow-up on all of our recommendations so that we do know the exactly what action has been taken or not taken on each of the recommendations. >> it starts to add up. [ inaudible ] >> these are really shrekkive examples of some of the issues we've raised in our reports. moving on, also, not only dod but we've also, if you turn to the next slide, have found instances where the department of homeland security also

administers multiple security assessments. they're always looking for vulnerabilities and they do assessments to port and assessments of roads and trucking and things like that and we found that other agencies also perform very similar assessments and that these types of assessments are not well coordinated. so, again, that is an overview of just some of the issues we've identified in national security. if you turn to slide 8, we wanted to spend a little bit of time talking about some of the other work that doesn't necessarily just relate to duplication and overlap, but we've gone through a process and we've actually posted on a website, over 30 other areas where we think there's potential to achieve cost savings over time in government, through the use of better business practices and more efficiencies. if i could highlight a couple and then turn it over to pat. first of all, again in the defense area, dod spends over $300 billion annually on the

procurement of goods and services. dod acquisition practices and contract oversight has been on our list of high risk issues for many years because of the potential for waste and inefficiency. the administration has focused on this. secretary gates has a set of initiatives that could help to deal with some of these challenges but in our assessment closer review and prioritization of requirements and a use of a knowledge-base approach to managing technology risks and cost, schedule and performance issues and then, increase use of competition and better contract oversight, could lead to significant cost savings within the department of defense. next? if you turn to slide 9. we believe similar opportunities for improved outcomes also exist regarding department of lottery acquisitions and grant programs. in addition to improving its oversight of contractors and demonstrating sound acquisition

practices, dhs can improve its management of grants through greater streamlining of some of its programs and standardization of grant administration. so with that, i'd like to turn it to pat. >> if we could turn to slide 10, our work is also pointed to potential tunltss on the revenue side of the house. for example, tax expenditures, pref remember shall treatment in the tax code accounts for almost $1 trillion in 2009. we listed a number of examples of tax expenditures on this slide and i'll talk about a couple of them. the first one, the research tax credit. that credit totalled $6 billion in 2005. it's the latest information that we have on that particular credit. about a billion or about half of that went to corporations that had received over $1 billion a year. in addition to looking at the tax credit you also have to look

at all of the other expenditures that the government makes on research across the board. we have direct expenses, grant programs, loan programs, loan guarantee programs. we don't look at these tools of government in total. they're spread across many agencies and as i said, they have very -- in some cases they have very specific uses and intended outcomes. but they're not looked at in total and not looked at in conjunction with what other spending is occurring by the government. and the tax credits are a form of spending by the government. we're giving tax breaks to encourage particular activities. another one on this list is the ethanol tax credit which is the third one. that credit was instituted, we believe, to encourage the development of the ethanol industry in this country. at this point the ethanol -- the

conventional ethanol industry is fairly mature. to the intent was to also encourage the use of renewable fuel. another program that's doing that is the renewable fuel standards that require a certain percentage of renewable fuel be included in gasoline and other products in the country. so we have serious questions about the merits of that tax credit at this point. the revenue is projected to be $6.75 billion by 2015. if i could have the next slide, please? the tax gap is also, we believe, an opportunity for additional savings. approximately 84% of taxpayers pay their taxes voluntarily and on time. the irs's estimates, and this is

the latest, in 2001, a tax gap which is noncompliance with the tax code, costs about $345 billion each year. >> more than that. >> okay. >> the information we have is the irs is now going to estimate it again until 2013. it's something that congress may want to consider having done more frequently. we list a number of opportunities that potentially could improve -- close the tax gap through increased enforcement as well as the tax code is very complex and it can be difficult to comply with. slide 12? >> i don't really -- [ inaudible ] >> expenditures, i think, tax

expenditures are just spending by another name. >> it is. and that was to the point of trying to look at one of the things that happens is the layering of programs, layering of tools and not looking at them in their totality. when you look at tax credits versus direct spending the tax credits may go through the tax-writing committees of congress where spending is going through oversight committees and the authorizing committees. on slide 12, we talk about, this is another potential for revenue enhancement, i would say. on oil and gas royalties. what we have found through our work is that the department of energy may not be collecting all that the federal government is entitled to. the monitoring and inspection of production of the federal leases could definitely be improved.

last year we collected $9 billion in revenue. that does change from year to year. the prior year was about $22 billion. that reflects the price of oil and gas. in addition, congress may want to consider looking at the royalty rates and our lease terms. our work in 2008 pointed to the united states charges some as a lower lease rate royalties and lease rates in terms compared to other countries and even some state governments. >> do you have an estimate on how much money we could have in addition? >> we don't at this point but we certainly could work on that for you. part of trying to make an estimate is what are the alternatives that you would want to assume? we know what we're collecting and we know what other countries do and we could make some hypothetical assumptions to give you some ideas.

on slide 12, we talk about the farm payment programs. gao's work over the years has found a number of problems -- i'm sorry. slide 13. gao's work in the farm programs have found a number of issues over the years and in fact, congress and the administration have acted on several -- many of them. for example, our work on payments being made to high-income farmers. how disaster insurance is paid for crop disasters. and as i said, the administration and the congress have taken actions. but there are other programs. we spend about $6 billion a year on farm programs. an example of an area where there may be some layering here, and a need to revisit what a program is zog the direct farm payment program. this -- we spend about $5 billion a year on the program.

this program was established in 1996 in the farm bill. it was intended to provide temporary payments that would end in 2002. the purpose at the time was to transition from the dependence on subsidies. it has been re-enacted. it is still a current program. as i said, this really points to one of the things that happens of layering programs on top of programs and not revisiting an area in total, whether it's education or whether it's farm programs or whether it's, you know, any program -- any area in the government you could point to and look at seeing layering of programs. slide 14? we talk a little bit here about federal improper payments. and this is really direct spending by the federal

government. the estimate for 2009, fiscal year were that there were $99 billion in improper payments. clearly a reduction of just 10%. >> do you have a breakdown? a breakdown of where the improper payments went? >> we can try to get that for you. >> i think that would be very important to this commission. that's a obviously, a very big number and if we could get your breakdown of where you think it's occurring -- >> okay. and clearly, just in the total, just a 10% reduction would result in some considerable savings for the federal government. we do point out a number of things here on terms of opportunities to reduce the amount of improper payments through improved internal controls. improved program design as well as a number of legal reforms. >> what do you mean by improper payment? >> an improper payment would be a payment that has been made

that is not in accordance the regulations of that particular program. so it could be, for example, someone received a benefit. they did not meet the eligibility requirements. >> jan, we -- [ inaudible ] we've had people get financial aid at the university if it were not really eligible for it, that would be improper. >> if i could have slide 15, please. this is another area that you may want to consider looking at in terms of revenue enhancements. how are user fees being used? based on the principle of the user should be paying for the benefit they receive. there's been an increased use of user fees across the government. there may be other opportunities to employ user fees to offset -- to be used in place of general

funds spending. one -- we list a number of opportunities where federal revenue could be enhanced through user fees. for example, periodically, revisiting what the fee is, possibly on a bi annual basis and looking at the what the full cost of government is in trying to recoup that. often times when we set user fees they are based on direct cost as opposed to the direct and indirect costs to government. >> could i just point out that on immigration we raced the fees significantly. there's a question in some minds whether that yields the results that we want but certainly onwhy that would be on the list here. >> so i think, you know, congress has been changing things >> congress is changing things and administration. that may be slightly out of

date. apologies for that. on slide 16, i'd like to address the challenges that we see in addressi addressing duplication across the government. i'll run through these fairly quickly because i know we're running short of time. there are a number of challenges to make this extremely difficult. first of all, definitions. we have different reviews on what the degree of duplication is and the extent to which it exists. for example, we do not have an agreed upon definition of a program in the government. we all define that slightly differently. we talked a lot already about developing baseline data. we don't in many cases have good data for many reasons. we lack comparable data, reliability of the data is questionable. and there's difficulties conducting data analysis across

agencies across activities. a lot of times when you look at overlapping, it is not just in the department of education but the other programs are in the department of labor, department of veterans affairs and trying to ganch informati to gather information. you feel it is reliable and sufficient to make decisions. and tlos have outcome based information. what programs are working, what are not working as opposed to inputs and process which we can gather fairly quickly and we do on a regular basis. but often are missing solid outcome information. slide 17, please. another challenge is identifying potential savings versus realized actual savings. our previous work has shown that program consolidations can lead to increased efficiency and improved performance. for example, program

consolidation software opportunities to reduce federal spending in terms of administrative costs, program costs or both. however, there are challenges. for example, if you're combined programs don't eliminate the administrative costs, what have you really saved sth integrate the systems, processes of agencies. and this takes a long time to do. we often have short attention spans and think it can be done in a year. it often takes much longer than that. slide 18. identifying specific solutions can also be a very large challenge. agencies encounter a range of challenges in addressing duplication.

their mags missioissions may no enforcing. they may conflict. interagency is hindered by compatible procedures and computer systems. and then you've got this third bullet, subbullet here which i call turf problems. we hear a lot about turf problems and just joint within the congress, well, there is also turf problems in the agencies and the agencies are going to be protecting their programs, their resources. and it's important to be conscious of that. obstructions can be immensely complex and clearly they're politically charged. in addition, we have to be conscious of the implementation costs. often times as you're consolidating a program, it's

going to cost more in the short run to get the long term benefits. which means that it's important to have a -- an agreement and what's going to be done. can i have slide 19, please? >> as well as a very detailed implementation plan. an example of some of the difficulties the government has gone through in the last decade has been the department of homeland security. it was consolidated from 20 plus agencies and trying to integrate numerous systems, processes, cultures. it is still a work in process, i would say. and we need to recognize that and the agreements in the front end and the detailed long term implementation plans for success if consolidation is -- >> let me add that i'm on the intelligence committee in the house. we're hoping to get the help of the gao which because of

national security issues has -- -- we think we can deal with that. one of the things we need to look at, i think, in having created a new department, the director of national intelligence, are we really achieving the kind of coordination and cost savings, et cetera, or have we just set up yet another office in the effort to do that. we have 16 intelligence agencies. >> and one of the issues with coordination is what is an agency going to gain out of it. there is insuring coordination and value to all of the parties. it's going to take sustained leadership, commitment, monitoring and oversight.

there are keys to success. withholding organizations and people accountable in the short term and long term. consolidations, elimination of duplication overlap and fragmentation is not easy. it takes time. and so, therefore, it's critical to have that sustained leadership oversight and accountability for people. >> really, this is a place where having been on the executive side i can say that congress really needs to grab the ball. because you have a turnover in leadership about every 18 months of these agencies. and the new head comes in and they've got their whole new way and their reforms. basically, the agency just says i'll wait this guy out until the next guy comes in. it's not like having david cody who you know is going to be there for 10 years, 15 years and you really have to do what they say. so if you're going to have

the -- make the recommendations, making sure congress has some mechanism to really follow up and make sure that the changes you want made done regardless of who's running that agency every two years, i think could make a big difference. >> you know, one the problems that oversight committees have is that change. the new person comes in to testify. we ask the same questions. and they say well, i'm new here. i'm going to make those changes. and by the time we come back and check on it, there is another person there. >> yeah. >> saying, yeah, i'm going to make the reforms. and they don't get done. >> i'm piling on but building on the point the two of you made. honeywell. there's no way you can institute changes and get them done over the course of a couple years. just being there for eight years and being able to just regularly have that drum beat. you keep measuring the same stuff, keep driving it.

it is over the course of five to ten years, really gets you some where. you look at the size of the agencies, they dwarf honeywell. and the idea that somebody can come in and in 18 months make it happen, ain't no way. i think you really put your finger on something important on this. how do you make sure that continuity of purpose, the metrics that that continues to stay. and you don't just keep redoing stuff every 18 months. you run into that phenomenon that says we can wait this guy out, too. >> if i can make a comment on that issue, that is one of the reasons that gao recommend there be a chief management officer with a seven-year term or so. now congress in passing legislation did establish the chief management officer and deputy chief management officer. he is also the deputy secretary of defense. so he wears two hats there.

so that term is the normal term. it was presoosly because i think the recognition that dod had eight of the 30 -- there was need for sustained focus on the issues over time that we made the recommendation. >> if i could have our next slide. slide 20. i'd like to talk briefly about the work that we're doing under mandate that was in the legislation. senator coburn introduced this. this mandate requires gao to annually report on duplication across the government. if i could have the next slide. i'd like to talk a little bit about what that work is entailing this year. our first annual report will be -- we'll be reporting to the congress in february of 2011.

we're timing it to be available for the budget cycle, for each budget cycle. and it addresses the main things we were talking about in the first report. we're focusing primarily on federal programs receiving discretionary funds for this report. we are going to be relying on a lot of our past work as well as some of the work that's on going and pulling this report together. we'll also be including major cost savings as i've talked about here. there will be some updated information. we're in the process of updating what we consider the major cost saving opportunities across the government. we will also be introducing in the report our future work of where do we think -- where will we be going in the following report? we recognize that we can't power the entire government in any one year. so we are selecting targets of opportunities that we think will

have significant savings potential and we'll be reporting them on a regular basis. >> i think you will have a target rich environment. >> i think we do. and we are talking with many of the committees of congress and constructing the areas of targeting and have welcomed input from all the committees of congress. and certainly would welcome any insights you all have. >> i really appreciate it. after the years here of nothing has changed. and i was part of it. in fact, you hit a nerve right here. it's going to hit every nerve. it's going to hit me hard and that is oil and gas, royalties. computation. i mean, you know, you don't think i'll get holders. but if anybody believes they're going to get out of this

unscathed, they're wrong. and we're not really doing our job. oil and gas is bread and butter in my state. it's bigger than milk. and furthermore, we have taxed the industry with a severance tax because we knew when the product was gone, they'd be gone. so we have now about 4.2 billion in permanent mineral trust fund. and when they are gone, we will be living on that. how many times i was here in the 18 years we cited -- we cited you, the gao, as the gold standard. gao tells us this. gao tells us we have a gao report. you ghive that to your

constituents and then we never do anything that you suggest. nothing. ever. but we have a hearing. the gao has said this. and everybody perks up. and improving collection of royalties, doing these things. max has spoken about that tax gap several times. he's athese are real things. but the real problem is there is this other problem of down and deep in the bureaucracy. you can outit with them but you can't outweight them. you can outwit them but they will outwait you. they just say here comes a new guy. i notice this pay as you go statute says the word shal. that's a different language than i've seen before. and when you get through with the word shale, i think this first report in february, while

they're still mulling around in what we've done is going to get things off the dime. i thank you very much. very impressive. >> thank you. >> i'm also -- i thought dave cody made a terrific recommendation. if we can get your recommendation for the last five years. as we look at ways to reduce the budget, you know, that ought to be the first place we go, not the last place we go. >> other comments for -- other questions? yes, sir? >> if i could just ask a question about the tax expenditure slide i don't know which one it was. >> slide ten. or 11. >> i don't quite recall what gao -- one, i don't believe there is an accepted definition of tax expenditure. i want to know is this all

encompassing, all deductions? >> yes, it is. >> so of this, a number of these tax expenditures would probably come under the heading of transfer payments. >> right. >> what percentage then of the tax expenditures could be categoriesed as transfer payments? >> i don't have that number. i can go back to our tax experts and see if we can get that for you. >> and then clearly -- >> okay. >> clearly out of this trillion dollars, i expect two of the more popular exemptions are going to be the mortgage deduction and the charitable. do you know out of this $1 trillion what that universe is? >> i don't have those numbers. but we certainly can get those for you. >> it is relatively easy to get there. about 179 of them.

>> if it's 179, it's not too few. >> exclusion for health and pensions is the top. and then mortgage interest, those three constitute a good share of those. and, yeah, on state and local auction. one of the issues is not just the magnitude but whether there is any thought of coordination. for example, low income housing credit is over $10 billion for low income housing. hud doesn't even include that in their annual performance plan. because that's not their responsibility. that's the treasury department's responsibility. so it's partly the fiscal thing and partly the lack of coordination. >> another thing did you quite well, for example, you took housing. you grouped all of the programs that affect housing. what people should do is look at which ones are the most effective. and the mortgage interest

deduction one is of the things we do. is that really the best way to meet our need? >> that is one of the things we were trying to point out, trying to look at the programs and what they were trying to accomplish by -- in looking that way and looking across the government at -- because you'll find programs supporting a particular goal in many different places and also using many different tools. tax credits as well as grants programs, direct spending, loan guarantees. and you can name -- housing is one. research is another. energy programs you will find across the government. >> if i could, chairman, sitting on the house financial services committee dealing with over nine different housing programs in the hud jurisdiction, many of which have proven to be ineffective or demonstrate nod

results, i would welcome you as a witness to our committee some day to make the point you just made. >> since plain to be retired very soon, i can't wait. >> are there other comments? we thank you for coming. when you -- when the committee members get back in november, we've got some tough decisions to make. please keep your calendars open. we thank you for coming to day. >> today, president obama announced the departure of rahm emanuel. he is replaced by a man who started chief of staff in the senate. rahm emanuel is running for mayor of chicago. this is about 15 minutes. >> ladies and gentlemen, the president of the united states. [applause]

>> thank you. thank you, everybody. thank you. everybody, take a seat. this is not for me. good morning, everybody. welcome to the least suspenseful announcement of all time. [laughter] as almost all of you have reported, my chief of staff, rahm emanuel has informed me

that he will be leaving his post today to explore other opportunities. [laughter] this is a bittersweet day here at the white house. on the one hand, we are all very excited as he takes on the new challenge for which he is extraordinarily well qualified. we are also using -- losing a leader of our staff, one that we will miss very much. we are about to face some of the most difficult years. the challenges were big, and the margin for error was small. an economy on the brink of collapse, and issues we have put off for decades.

health, energy, education, how rebuild the middle class that had been struggling for far too long. i knew that i needed somebody at my side that i could count on day and night to get the job done. in my mind, there was no candidate for the job that would meet the bill as well like rahm emanuel. that is why i told him that he had no choice in the matter. he was not allowed to say no. it was not just rahm's brought an array of experience in congress and the white house and politics and business, it was also the fact that he brings an unmatched level of energy and enthusiasm and commitment to every single thing that he does. this was a great sacrifice for him and his family to move out here. rahm gave up one of the most powerful positions on capitol

hill to do this. in the last 20 months, he has succeeded all of my expectations. we could not have accomplished what we have accomplished without his leadership. from preventing a second recession to passing historic health care and financial reform legislation to restoring america's leadership in the world. for nearly two years, i have begun my work day with rahm. i have ended my work day with rahm. much to his chagrin, i have intruded on his life at almost any hour of the day, any day of the week with just enormous challenges. his advice has always been candid. his opinions have always been in cycle. his commitment to his job has always been heartfelt. he has a passionate desire to

move this country forward and lift up the lives of the middle class, people who are struggling to get there. he has been a great friend of mine and will continue to be a great friend of mine. he has been a selfless public servant. he has been an outstanding chief of staff. i will miss him dearly as will members of my staff and cabinet with whom he has worked so closely and so well. now, i don't think anybody would disagree that rahm is one- of-a-kind. i am very fortunate to be able to and the baton to my wise, skillful, and longtime counselor, pete rouse. pete has more than 30 years of experience in public service will serve as interim chief of staff as we enter the next phase of our administration. many of you remember pete as the top aide to then senate majority leader tom daschle.

he is professionally known as the 101st senator. from the moment i became a u.s. senator, he has been one of my closest and essential advisers. he was my chief of staff in the senate and helped orchestrate and advise my presidential campaign. he has served as one of my senior advisers here at the white house. in that role, he has taken on a series of legislative and management changes with clarity and common purpose. there's a saying around the white house," let's let pete fix it." [laughter] he does. he is known as a skillful problem solver and the good news is that we have plenty of problems to solve. [laughter] i am extraordinarily grateful to him that he has agreed to service our interim chief of staff and i look forward very much to working with them in this new role.

obviously, these two gentlemen have slightly different styles. [laughter] i mentioned for example -- this is a couple of years ago -- i pointed out that when rahm was a kid lost part of his finger in an accident. it was his middle finger, so it rendered him mute for a while. [laughter] pete has never seen a microphone or a television camera that he likes. [laughter] and yet, there is something in common. as president of the united states, you get both the credit and the blame for what happens around here. the blame is usually desert -- deserved or i happily accepted because it comes with the

territory. the credit really goes to the men and women who work in this building. it goes to people like rahm and pete and the hundreds of others here today who sometimes gets attention and sometimes don't. these are folks who get up -- give up incredibly lucrative opportunities, sacrifice enormously, and their families sacrifice enormously. they come here every day to do the best possible job on behalf of the american people and often times they don't get the thanks they deserve. as your president and as a fellow american, i want to take this moment to say to all the staff, all the cabinet members, how proud i am of you and how grateful i am to you.

and how particularly proud and grateful i am to my outgoing chief of staff rahm emanuel. [applause] [applause] >> thank you. slightly different reception that i got my bar mitzvah at what i appreciated. [laughter] thank you, mr. president for your generous words but more importantly, thank you for your warm friendship, your confidence, and the opportunity to serve you and our country in such consequential times. needless to say, this is a bittersweet day for me, too.

on the one hand, i am excited to be heading home to chicago which as you know very well is the greatest city in the greatest country in the world. i am energized by the prospect of new challenges and eager to see what i can do to make our home town even greater. these are unprecedented and great times in chicago. the chicago bears are 3-0. [laughter] i am also said to leave the vice -- sad to leave you, the vice president and my terrific colleagues at the white house and the cabinet and both sides of presidential cabinet colleagues. it has been a profound privilege to work for and with you, mr. president. i watched you confront some of the toughest challenges of our time and you have done with --

done it with unfailing grace, intelligence, and courage. you had the guts to make the tough calls to stop the freefall and save our country from a second great depression. you have taken on some of the most powerful interests in this town and stood up for the american people. you have been willing to challenge the worn out ideas and the still thinking that often -- stale thinking that often stands in the way of progress. mr. president, i thought i was tough. as someone who saw firsthand how close are nation came to the -- our nation came to the brink and what you had to do to put america back on track, i want to thank you for being the toughest leader and the country -- any country could ask for in the toughest times any president has ever faced. [applause]

[applause] even on the hardest days, you never lost focus on why we are here, not just to score political points but to solve problems, not just to win the next election, but to make a difference to the next generation. i have served you, mr. president, as a member of your staff, but i also observed you as a friend. i have seen what you are -- few are privileged to see. the father whose heart breaks when he writes a letter to parents whose son or daughter has been lost on the field of honor, the man of quiet, committed faith who always appeals to the better angels of our nature. and the proud product of the american dream who sees in the reams of economic statistics the child who struggles to and a single parent with limited income but unlimited potential.

you have lived that american dream, mr. president, as have all right. -- as have i. my father and my grandfather came to this country for opportunity. they came here for a better life for their children. my mother marched with martin luther king because she believed that none of us is truly free until all of us are. both my parents raised me to give something back to the country and the community that has given us so much. i want to thank you for the opportunity to repay in a small portion the blessings this country has given my family. i give you my word that even as i leave the white house, i will

never leave that spirit of service behind. [applause] because my temper runs a bit -- temperament is sometimes a bit different than yours, mr. president [laughter] i want to thank my colleagues for your patience the last two years that you have shown very i -- shown. i am sure that you have learned some words you never heard before [laughter] and an assortment of combinations of words. [laughter] what we learn together was what a group of tireless, talented committed people can achieve together. as difficult as it is to leave, i do so with the great comfort of knowing that pete rouse will be there to lead the operation forward. from the moment i arrived, to

the moment he arrived, peace has -- pete has been a good friend with great judgment. he commands the respect of everyone in this building and brings decades of experience to this assignment. finally, i want to thank my wife amy and there are three -- amy and our three remarkable children without whose love and support none of this would of been possible. i hope to end this soon so they can get back to school today and finish their exams. [laughter] mr. president, thank you and thank you all, i look forward to seeing you in chicago. [applause] [applause]

[applause] [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2010] >> white house press secretary robert gibbs said he had no specifics on how long rouse might serve as the u.s. chief of staff. president obama's long-term advisor is stepping in for outgoing chief of staff rahm emanuel who will be running for mayor of chicago. this briefing is about 50

minutes. >> pardon me? [inaudible] absolutely not. she was talking to the president. she would you all about it. we're missing a few folks. it will be on their way. let's look ahead and then i can answer your questions. monday, the president will attend a meeting of his economic recovery advisory board here at the white house. on tuesday, the president will join in the first ever summit on community colleges. it will talk about how we develop our educational system. he will join dr. baden at the opening session. later, the president and first lady will host the diplomatic corps reception here at the white house. in the evening, the president